Is it ever a good idea to use your SMSM to invest in gold?

When buying gold or silver for the first time, it is understandable to worry about whether you are making the best decision or not. Gold is not only rare but it is also one of the most expensive metals. So, buying or exchanging cash for gold is one way of ensuring that the value of your wealth does not drop. Gold is often treated as a good investment instead of an asset that would depreciate over time like diamonds, sapphires, rubies, and other stones.

Gold has been a high-value asset for centuries. Unlike many precious metals and gemstones, gold does not conform to any cultural norms or the economics of supply and demand. Gold is prized everywhere in the world. There is no country or person that doesn’t know how valuable gold is, so unlike some assets, there is never a shortage of gold buyers.

Gold has the incredible ability to hold its value even when inflation is at its highest. This is the kind of investment you need to buy SMSF gold bullion to maximise returns.

According to the World Gold Council, a large percentage of people gain more from their investments if they have gold in their portfolios than those who put their money in stocks and bonds.

So, can Gold depreciate?

Assets that depreciate over time lose their value quite quickly. An example of a depreciating asset is computer technology. Your smartphone, tablet, or computer loses its value as soon as you leave the store with it and unbox it. Technology changes very rapidly, what was the best thing a month ago might be obsolete today. Gold is not the same.

Gold on the other hand does not depreciate. One reason is that it is recyclable and can be melted and refined to make new products. This is why gold buyers are always trying to get people to sell their old gold because this can be fed back into the supply chain. Gold does not tarnish or deteriorate; even antique gold items hold their value into the future.  However, gold jewellery is made of gold mixed with other metals like copper, zinc, or nickel which could reduce its visual appeal over time. This is why when it comes to buying gold for investment purposes the best gold is the purest bullion made up of 99.99%.

Consistent High Demand

Unlike other precious metals like platinum and palladium, gold is soft and can be worked into any shape. Gold is rare and available in limited amounts. Over the years, gold mines production from mines has been dwindling however, the demand for this precious metal has remained high. This is because gold is used in a lot of industries, not just in jewellery or as an investment asset. A lot of industries prefer using gold because of its unique properties. It has unparalleled electrical and thermal conductivity, which makes it useful for many commercial and industrial applications. According to a report compiled by the United States Geological Survey, 37% of the gold produced goes to the machinery, electronics, and aerospace industries. 50% of the gold goes to the jewellery industry and the rest goes into investment-grade gold bullion products.

Fifty percent of gold demand goes to the jewelry market, this number increases every year. A recent report from Facts & Factors reveals that precious metal demand for jewelry-making will reach $500 billion by 2026 at an 8.5% annual growth rate. If you combine these statistics with the rising demand for smartwatches, virtual reality headsets, and wireless charging ports, you’ll see how the commercial use of gold might triple in the next few decades.

Gold as part of your investment plan

Australians who are in a self-managed superannuation Fund always have to find viable ways to improve the performance of their investment portfolios. Gold is an asset that performs well in inflationary times and when the economy is not doing so well. You can Buy SMSF gold bullion to protect yourself (it acts as insurance) against volatile economic conditions and it also helps increase your wealth when the market price appreciates.

Unlike other typical investments, gold bullion will always be regarded as valuable. Investing in gold bullion is a wonderful way of diversifying your superannuation fund’s investment portfolio. However, it is important to know what you are doing when you buy gold bullion for your SMSF. Consult a financial planner if you have to and speak to your local gold dealer to find more information on how the process would work.

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