With precious metals rising in value, investors are exploring the safest and most profitable way to invest in gold.
Key Details
- On Wednesday, the Federal Reserve announced its ninth interest rate hike in 12 months, signaling that the U.S. will continue to face a challenging battle against inflation.
- With inflation sitting at 6%, an ongoing international banking crisis, and months of recession fears looming, many investors consider making safe investments in places like gold and silver.
- Investments such as Bitcoin, silver, and gold are historic hedges against market trends and offer opportunities for less volatile protections against inflation and recession.
- Gold has seen a 6.7% year-to-date value increase—now at $1,970 per ounce—and rallied 8.1% in the aftermath of the Silicon Valley Bank crisis.
Why It’s Important
Gold is widely considered to be one of the safest and most reliable assets to hold during times of economic downturn or inflation. Many avenues exist to purchase gold safely, including mining stocks and royalty companies, IRAs, coins, and bars. Other methods can involve high overhead and upcharges that lower your returns, often encouraging viewers to “buy gold.” Knowing how to buy gold is as crucial and know when to buy it.
Garrett Goggin is a gold- and silver-stock analyst with Stansberry Research, a Baltimore-based publisher of newsletters for self-directed investors. He tells Leaders Media that gold is a safe investment in light of the current economy, going as far as to say that this is an ideal moment to purchase gold. As the dollar’s value depreciates, the cost of living suffers. The dollar becomes worth less with each $1 trillion that the Federal Reserve prints.
“The beauty of physical gold is that you can hold it on you personally, and that is what protects you,” says Goggin, whose newsletter is Gold Stock Analyst. It can’t be stolen or it can simply evaporate like crypto or other digital assets.
Investing In Royalty Companies
Goggin recommends investing in royalty companies, which he says can be one of the best ways to invest in gold. Royalty companies finance gold mines—but don’t do the actual mining—and receive a margin of total produced goods with limited overhead. As inflation drives up gold prices, it increases the margins of these companies.
“Gold miners need hundreds of millions of dollars to finance mining operations. They’ll go to the bank, they’ll sell equity and then they’ll go to a royalty company like Franco-Nevada, saying ‘well give you 1% of the gold in the life of the mine in exchange for $500,000.’ They help the miners finance the project in exchange for gold, and they have access to hundreds of gold streams for decades. Companies like Franco-Nevada just count the money with little overhead. When the price of gold rises, their costs are fixed so their margins rise,” says Goggin.
Safely Investing In Physical Gold
The online gold market is readily available, and relatively easy to research and find the best deals. Goggin recommends searching the internet for options, putting in the research on the reputation of these websites, looking for reviews, and finding the best option to buy gold and silver with the lowest markup—such as reputable precious metals sites like APMAX with a 10% markup.
“New MASA Coin and bars have a particular value, and you need to know what you’re doing. American Eagle is a classic gold coin, and you can find its sometimes with as low as a 5% markup. I recommend staying away from those unless you know what you’re doing. I recommend coins like American Eagles or Gold Bars online with the lowest market up possible. You can buy them at a 2.5% premium over their price of gold,” says Goggin.
Backing Up A Bit
Viewers of Fox News or The Ben Shapiro Show are likely familiar with companies that encourage viewers to “buy gold.” Commercials teaching people the importance of buying gold have been common in conservative media for decades, and companies like Birch Gold Group and Noble Gold Investments have become notable household names as a result.
Goggin says “buy gold” advertisements are not necessarily scams, but they do come at a cost—and not all are reputable. Websites like Birch Gold and Nobel Gold sell legitimate IRA and 401K options, but at an up charge.
“The whole ‘gold as an investment’ idea caters to fearmongering. Ads say, ‘the U.S. is going down the drain’ and ‘you need to buy gold to protect your assets.’ Gold ads appeal to these particular conservative news websites. Companies like Birch Gold and Noble Gold aren’t outright scams, but they’re charging for the services they offer,” says Goggin.
“If you have an IRA, you can just buy into the GLD, and the expense ratio is only 25 basis points. You hold that in your name or company. Otherwise, the fees will be much higher. Your returns will be less.”
