Over the last few weeks, gold prices have been on the rise, reaching a record high of over $2,400 per ounce on Monday. This marks a significant increase from just over $2,100 per ounce in late March, translating to a 14% rise in a short period. This surge is primarily driven by today’s unique economic climate, characterized by persistent inflation, geopolitical strife, high interest rates, and other unusual factors. These conditions have led investors to seek safe-haven assets like gold to preserve their wealth and diversify away from more volatile investments.
However, these aren’t the only factors propelling gold prices upward. The rising prices themselves are attracting a new wave of investors eager to capitalize on potential quick returns from gold investments.
Given the current market conditions, it might be a good idea to consider adding gold to your portfolio. There are various ways to invest in gold, including gold mining stocks, gold individual retirement accounts (IRAs), and physical gold. Among these options, 1-ounce gold bars are particularly popular and accessible. But is it wise to invest in these smaller gold bars now that gold prices are near record highs?
Should You Buy 1-Ounce Gold Bars Now?
Every investor should consider their unique goals and circumstances when deciding which assets to add to their portfolios. Nevertheless, with gold prices at elevated levels, it might be financially prudent to allocate a portion of your portfolio to 1-ounce gold bars.
Firstly, there is a strong possibility that gold prices will continue to rise over time, even if there are occasional dips, as gold has historically increased in value over the long term. If the current uptrend in gold prices persists, purchasing 1-ounce gold bars now could yield a quick return on investment. With gold prices significantly higher than a year ago and the notable increase over the past three months, this trend might indicate future growth.
Gold, especially in the form of bars and coins, has long been regarded as a safe-haven asset that can preserve wealth during turbulent economic periods. When markets are volatile and economies struggle, investors often turn to gold as a reliable store of value and a hedge against riskier assets.
Additionally, gold is an excellent hedge against inflation. Historically, gold prices have risen alongside inflation, maintaining its purchasing power as the cost of living increases. This makes physical gold a good way to protect the real value of your wealth from being eroded by rising prices.
Unlike fiat currencies, the supply of physical gold is essentially fixed and cannot be inflated by central banks or governments. This scarcity helps underpin gold’s value, particularly during inflationary periods when paper money loses purchasing power. The low correlation between gold prices and other assets like stocks and bonds also makes it an excellent portfolio diversifier, reducing overall portfolio risk and volatility in uncertain times.
Benefits of Investing in 1-Ounce Gold Bars
There are several unique benefits to investing in 1-ounce gold bars:
Affordability
While gold remains a significant investment regardless of the form, 1-ounce bars are generally more affordable than larger bars or premium numismatic coins. This affordability makes gold ownership accessible to a wider range of investors.
Liquidity
One of the main advantages of 1-ounce gold bars is their exceptional liquidity compared to larger gold products. These smaller bars can be easily bought and sold through a wide network of precious metals dealers and exchanges, allowing investors to access their capital when needed.
Portability
At just 1 troy ounce in weight, these compact bars are extremely portable and can be discreetly stored or transported with ease. This portability is advantageous for investors looking to avoid the high costs associated with using gold custodians and third-party storage options.
Divisibility
Since they conform to a standard weight, 1-ounce gold bars can be divided into smaller fractional portions without having to liquidate the entire holding. This divisibility offers convenience and flexibility that larger bars often lack.
Tangible Asset
Many investors find satisfaction in owning a tangible hard asset like gold, which cannot be debased and has maintained value for millennia. 1-ounce gold bars offer this sense of security at an affordable price compared to many other physical gold assets.
