Reasons Why You Should Own Gold Bars

Everyone knows that gold is precious. But not everyone knows the real reasons why. The chances are, that if you are reading this you will already have a good idea of the reasons for putting money into physical gold.

Gold is considered by some to be the king of precious metals. Having at least a portion of an investment portfolio in gold, and especially physical gold bars, can certainly help one rest a little easier in these volatile times.

Below are a few of the less obvious reasons why some investors hold, own or invest in gold bars:

Fiat Currency is being rapidly debased. Fiat Money is essentially being printed at a rate faster than at any time in modern history. As a result the buying power of currency is getting weaker and weaker because of more and more oversupply. But gold bars are not like dollars and other currencies. They cannot be easily created and therefore tend to maintain their buying power over time.

The increasing prices of commodities do not negatively affect physical gold bar prices. Gold bars as a hedge for inflation, can increase in price along with other commodities.

Eastern Central banks and other institutions are more likely to increase their holdings of gold bars, instead of foreign currency reserves. Whilst western central banks have been selling down their gold reserves under the Washington Agreement, many Eastern central banks have been increasing reserves of gold, mostly in gold bar and ingot form, and are likely to continue to do so as skepticism in the long term value of their fiat currency reserves increases.

There is an increasing investment demand for gold bars and coins from private investors. Gold bar collecting worldwide is increasing as new entrants to the market buy gold bars, as distrust of paper financial products increases.

The dollar is projected to continuously depreciate its value. Many economists predict that the decreasing value of the US dollar will increase the value of alternative investments like gold bars.

Gold bars can be bought now at lower premiums than Bullion coins. Current high demand for bullion coins is pushing premiums higher, bars are not suffering as badly from this.

In general, most investors in gold bars bought gold bars for two reasons:

Bars tend to trade at a lower premium than coins therefore are a cheaper alternative to coins.

To provide counter party risk free safe haven asset for their finances while there is social, political, economic, and currency-based crises.

Why Gold Bars or Coins and Not Other Forms of Gold?

So, why you should buy gold bars instead of other forms of gold investment?

Gold bars and coins carry no counter party risk. Meaning, holding them is not holding someone else’s liability. Other forms of gold investing or speculation all carry counter party risk.

Gold certificates

Gold futures

Gold mining stocks

Gold Options

Exchange traded funds

Gold mutual funds

Spread betting

If the institution providing you with the gold product goes bankrupt, all you have is a worthless piece of paper.

Article Published On: 02 April 2009
Article Revised On: 11 May 2011

Disclaimer
The above article is for information purposes only, and is not advice. Its accuracy cannot be guaranteed and no responsibility for errors or omissions can be accepted by the website owners.

Bullion Supermarket > Bullion Information > Reasons Why You Should Own Gold Bars

	USD	Date
GOLD	1,719.00	06/02/2012	PM

Reasons Why You Should Own Gold Bars

Why Gold Bars or Coins and Not Other Forms of Gold?

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