Should seniors buy gold bars and coins? Pros and cons to know

After a great run for gold prices over the past few months, more seniors may be turning to gold for its potential for stable returns and diversification.

Specifically, physical gold in the form of bars and coins may hold some appeal for those who want to benefit directly from gold’s value with a tangible asset. But before deciding to buy in, it helps to know exactly how gold bars and coins may benefit senior investors, as well as the drawbacks to watch out for.

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Should seniors buy gold bars and coins? Pros and cons

These pros and cons can help seniors decide if investing in gold via bars and coins is the right choice for their portfolios.

Pros of gold bars and coins for seniors

Gold bars and coins can make gold a valuable part of your portfolio at any age for a few reasons.

• Liquidity: Gold is often considered a highly liquid asset because its recognized value makes it easy to buy and sell at any time. You can quickly look up the current market price of your gold bars or coins to trade them for cash when you need it. With other alternative assets, like real estate, it can take months to access your value. Physical gold’s liquidity could be useful for seniors who may need to quickly access some of their holdings during retirement. 
• Stability: Gold is also a stable asset and tends to hold value over long periods. While it does have short-term price fluctuations, gold tends to remain stable in the long run — and when other markets may drop. When you invest in gold bars and coins, you’re also investing directly in gold’s value. Your investment is worth as much as the weight of your physical gold is worth at any given time. That stability may offer some peace of mind for senior investors looking for a safe store of value.
• Diversifying your portfolio: Having a diverse portfolio is a smart idea at any age and can be especially beneficial for investors approaching or in retirement. Gold can make a good diversifier because its value tends to move independently of the stock market and can often go up when the value of the U.S. dollar is down. Just make sure you diversify with the right amount of gold. Experts typically recommend investing only up to 5% to 10% of your portfolio in the commodity — though seniors who may soon turn to their portfolio for a fixed income may consider an even smaller amount.

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Cons of gold bars and coins for seniors

Investing in gold bars and coins can also have some disadvantages — especially for senior investors who may have shorter investment timelines or are focused on maximizing returns. Here’s what to know:

• Cost: Not only can gold be expensive — its spot price per ounce today is more than $1,900 — but there are often added costs for buying gold bars and coins. When you buy your physical gold from a reputable dealer, you can typically expect a markup on any amount you buy, alongside potential transportation costs. Keep these costs in mind, especially when deciding how much you want to invest. 
• Storage needs: The cost of gold itself is one thing, but gold bars and coins may also require storage and insurance expenses. Depending on the amount you buy, you may be able to keep your gold bars and coins at home in a safe or in a bank safe deposit box. But another common option, especially for investors with larger amounts of gold, is working with a non-bank custodian for safe storage. Plus, if you choose to invest your gold in a gold IRA, you’ll need to work with an IRS-approved custodian to store your gold to qualify for the account.
• Lower returns: Gold can act as a safe store of value, but it’s not the asset you’ll want to turn to for very high returns on your investment. That’s why small amounts of gold are a good idea for diversification. With only a portion invested in gold, you can leave the majority of your portfolio in income-producing stocks and bonds, especially as you approach retirement.

The bottom line 

If you’re a senior looking to diversify your portfolio, investing in physical gold could be a good option. It may help keep your portfolio stable over periods of economic uncertainty and inflation while maintaining liquidity. Just make sure you’re aware of the costs and keep a healthy portion of your overall portfolio in other assets that can help you maximize returns in your retirement years. 

Before you buy in, it can be useful to speak with an expert about your individual investment plan and how buying gold bars or coins may help you reach your goals. Start exploring with a free investment guide here now.