December 30, 2024
Five Golden Rules for Gold Investors
Dear Subscriber,
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| By Nilus Mattive |
Gold had a phenomenal year in 2024, rising 26%.
And I think there are many reasons to expect it will do well in 2025, too.
So, to close out the year, I wanted to give you five rules that I follow when it comes to investing in physical gold …
Golden Rule No. 1: Hold it for the long term.
Although it doesn’t produce income, I treat physical gold like a high-quality dividend stock — something that can be bought and held for extraordinarily long periods of time. That’s a good way to protect and grow wealth through thick and thin.
It might not go up in a straight line or even look like it’s “doing its job” over shorter time periods. But gold has proven itself over thousands of years as a lasting, portable, universally recognized form of wealth.
Plus, I love the fact that it essentially exists outside of government-controlled financial systems.
In short, I view gold as the ultimate “forever” investment. It’s the insurance policy you never hope you’ll have to use.
That means there’s never a bad time to buy some. In fact, you can dollar-cost average into gold or silver. It’s a great way to smooth out shorter-term price swings and build a solid stake over time.
Golden Rule No. 2: Physical possession is the only true way to own gold as a long-term crisis hedge.
That’s my personal belief. But no one can deny there are lots of ways to invest in the gold markets.
For example, if you want steady income, you can invest in certain mining companies that pay dividends or sell options on gold-related stocks and ETFs.
Or, if you want to make outsized gains relative to the underlying metal price, you can buy smaller gold stocks that have the potential to produce massive gains.
But if you want to own gold as a last-ditch, immediately available, off-the-financial-grid store of wealth, only physical metals in your possession fit the bill.
Golden Rule No. 3: When it comes to physical metal,understand the two big choices.
Putting jewelry aside, you basically have two major options when it comes to physical gold.
Option No. 1 is bullion via bricks, bars or coins.
When you go this route, you will typically pay the lowest premiums over spot prices. And assuming you buy items from reputable mints, you should have no problem if (or when) it comes time to trade your gold for dollars or something else.
Option No. 2 would be numismatics, i.e., collectible coins.
The subject of gold coins is way too big to cover in this short article. But the basic idea is that you have to know a heck of a lot more if you go this route.
Condition, rarity and a whole bunch of other factors come into play.
And even if you look at one particular coin, you’ll see that premiums over spot prices can fluctuate greatly.
For example, I love buying pre-1933 St. Gaudens double eagles. Especially when they’re trading at relatively low premiums over spot prices.
That gives you additional possible upside with a floor closely tied to spot prices. But when premiums are higher, they’re not as good of an investment.
So, when in doubt, just stick to bricks, bars and bullion coins like the modern-day American gold eagle.
Golden Rule No. 4: Make sure you’re getting real gold.
There are all kinds of horror stories out there and an equal number of tips and tricks for making sure what you’re holding is actual gold.
Obviously, the weight of the piece needs to add up. It shouldn’t stick to a magnet. And there are very cheap nitric acid kits you can use to test the surface of a gold item.
Just know that counterfeiters have gotten very sophisticated — particularly when it comes to layering gold over tungsten, which has the same density as gold. Even sophisticated investors have ended up getting fooled.
So, it really boils down to buying from a reputable source — one that will charge you a fair price, deliver reliably and stand behind what they sell you.
Golden Rule No. 5. I don’t typically recommend having more than 5% to 10% of your overall investable assets in precious metals.
Stocks, bonds, real estate and other types of assets can experience huge price swings, just like gold. But again, they also tend to produce far more income on an ongoing basis.
So, while I recognize the value of holding some physical metal through thick and thin, I don’t recommend having it (and/or silver) represent more than 5% to 10% of your total investable wealth.
Best wishes,
Nilus Mattive
P.S. Want to get some physical gold right away? Then make sure you attend today’s special Weiss Ratings’ Gold Bull Market Summit.
It’s free. And everyone who watches will be eligible to claim a Weiss-exclusive gold bar. Click here to grab your seat now.
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