7 Great Reasons to Buy Gold

Posted - December 8, 2023
reasons to buy gold

Buying gold for the first time can be a confusing process. With so many different opinions out there on whether gold is a good investment, finding the right person to trust is tricky. Financial advisors have recommended gold as a way to safeguard your assets against inflation for decades. 

Diversification is key. Ask any financial expert, and they’ll tell you the same thing. By diversifying your portfolio, you might be able to keep taking profit – even when the market has a meltdown. This is just one of the many reasons to buy gold. 

Gold isn’t the perfect investment by any means. Investors who put their money on gold may have to suffer through several months before they see any return. In some markets, gold might not even be the best investment choice you can make. 

Still, today’s Bullion Academy article will walk readers through 7 of the best reasons to buy gold. By the end of our guide, even new investors should understand why gold remains one of the world’s most popular investments. 

What Makes Gold a Good Investment? 

So what makes gold a good investment? To understand the most important reasons to buy gold, we need to take a look at how gold gets its value in the first place. We pinpoint 3 aspects of gold that make it a popular investment choice: intrinsic value, beautiful appearance, and its historical price appreciation. 

Intrinsic Value 

Intrinsic value is the main reason why people buy gold. Traditional assets like stocks and bonds are indeed valuable. But according to most economists, fiat investments don’t have intrinsic value. That is, these investment options are only valuable because of external factors. 

Think of it like this. When a company performs well and makes money, their stock becomes more valuable and expensive to purchase. But what happens if that same company makes bad investment choices and loses all of their money? Their stock can go to zero. This means that these traditional assets aren’t intrinsically valuable. Their values depend on outside factors. 

Gold is a different story. Gold’s value depends on a number of factors, but it can’t really go down to zero. Gold’s rarity as a physical commodity gives it intrinsic value. For this reason, some investors say one of the big reasons to buy gold is that it has value outside of market fluctuations. 

Intrinsic value alone isn’t one of the main reasons to buy gold, though. People buy gold for all sorts of reasons, including its beauty. 

Beautiful Appearance

Aside from intrinsic value, this precious metal’s beautiful appearance is one of the major reasons to buy gold. All precious metals are beautiful – that’s why they’ve remained popular for thousands of years. 

But gold really is something special. In the modern era of minting, gold coins and bars feature genuine artwork. Coinage and gold bars have been integral to societies around the world for hundreds of years. Buying gold also means buying into a long tradition of celebrating human beauty, art, and excellence using a precious metal with brilliant shine. 

Nobody invests in gold just for its beauty, though. Before we get into the top 7 reasons to buy gold, let’s talk about historical gold price trends. 

Historical Price Appreciation 

In addition to being beautiful to look at, gold is a stunning performer as an investment. Gold hasn’t always appreciated in price. There are some years where gold will actually become less valuable. This is especially likely to happen during periods where the economy is good. As we discuss frequently on our blog, gold has an inverse relationship with the traditional economy. 

But for the most part, gold tends to appreciate in value over time. This has been the case for hundreds of years, which gives gold one of the most impressive resumes out of any investment class. 

This isn’t to say that gold will always stay in the green. No investment is perfect. But for many investors, gold’s history of consistent price appreciation is one of the best reasons to buy gold for your portfolio. 

Top 7 Reasons to Buy Gold 

Finally! It’s time to get into the top 7 reasons to buy gold. There are many different reasons to buy gold, and the best justifications for putting your cash into gold will vary depending on who you ask. 

But for us, gold’s appeal comes from 7 main reasons: portfolio diversification, collectability, inflation protection, deflation protection, numismatic value potential, scarcity and rarity, and emergency preparedness. 

Together, these reasons to buy gold provide investors with a clear picture of what gold can do to diversify and improve the quality of their portfolios. 

1: Portfolio Diversification 

Diversify, diversify, diversify. This is the cardinal principle of smart investing – at least according to leading experts. Diversification sometimes means mixing a variety of different risk profiles into your portfolio. For example, someone who traditionally invests only in safe, slow-earning stocks might consider diversifying by putting a small amount of money into a different, riskier market. 

South African Gold Krugerrand 1 oz Coin Reverse
Random Year 1 oz Gold Krugerrand

But gold represents an entirely different kind of diversification. Gold is a non-correlated asset. This means that when the traditional market moves into a bearish cycle, gold might not depreciate. In fact, gold can sometimes become more valuable when the traditional economy enters a downward spiral. 

Adding gold to your portfolio is one of the biggest reasons to buy gold. In fact, we’d actually call this the best reason to put your money on the world’s leading precious metal. Diversifying is never a bad thing, and gold is one of the easiest ways to add some diversity to your portfolio. 

2: Collectability 

For some investors, not everything is about money. Gold stackers tend to be particularly interested in the collectability of their gold coins and bars. Like we mentioned earlier, gold is one of the most beautiful elements on Earth. 

It would be wrong to list the best reasons to buy gold without taking some time to discuss gold’s collectability. There’s really nothing like a stack of brilliant, shining gold bullion coins or bars. 

Collectability also feeds into gold’s potential value. We’ll talk about this more when we discuss numismatic value as one of the reasons to buy gold. For now, remember that gold coins and bars are highly collectable. In fact, it can be addicting to watch your gold stack grow over time! 

3: Inflation Protection 

This is one of the most classic reasons to buy gold. With traditional assets, high inflation is a terrible thing. Stocks tend to be directly correlated with economic indicators like inflation, interest rates, etc. This isn’t the case for gold. Oftentimes, we note that gold tends to become more valuable when inflation gets bad. 

Remember: gold retains value, even in rough economic climates. Its intrinsic value means that gold will never go to zero. As a stable, consistent, and physical asset, gold is a great way to protect your portfolio against the ravages of inflation. 

PAMP Fortuna 1 gram Gold Bar Front
PAMP Fortuna 1 Gram Gold Bar

This isn’t the only justification for putting gold in your home safe, but many investors consider gold’s inflation-proof nature to be one of the biggest reasons to buy gold. 

4: Deflation Protection 

This one is going to seem strange. Gold can also function as a protection against deflation. Deflation isn’t a common occurrence. In fact, economists believe that deflation on a widespread scale has only happened a few times in recent world history. 

Still, some analysts think that gold might actually perform favorably during periods of deflation. Despite deflation being a sign that the economy is doing well and recovering, investors might turn to gold during deflationary periods. To some speculators, gold might be a way to “prepare” in case the tides turn the other way. 

5: Numismatic Value Potential 

Numismatic value potential is another of our favorite reasons to buy gold. Numismatic value refers to the value an object brings to the table outside of its intrinsic value. Gold is valuable because, well, it’s gold! But gold coins and bars are never sold for just their melt value. 

Instead, these products are sold for their precious metals content combined with a certain premium. You pay a premium every time you buy gold, silver, or platinum. 

But what makes numismatic value one of the best reasons to invest in gold? Put simply, numismatic value appreciation can help you to gain profit during bearish markets. If a gold coin is rare and in-demand enough, its numismatic value might make up for a declining spot price of the gold it contains. 

2023 1 oz Canadian Gold Maple Leaf Coin
2023 1 oz Canadian Gold Maple

6: Scarcity and Rarity 

We won’t spend much time on this one. Frankly, readers already know how rare gold is. The scarcity of this precious metal is part of what gives it intrinsic value, and its rarity has made it one of the most sought-after commodities in the world. 

7: Emergency Preparedness 

Some investors buy gold in order to be prepared in the case of an emergency. To certain preppers and stackers, gold presents itself as a commodity with value that might survive – even if the global economy collapses overnight. 

There’s some merit to this argument. Fiat currencies, the paper dollars that you buy things with every day, are shockingly fragile. The value of the United States Dollar could quickly decline – or even collapse entirely – in the case of certain major world events. 

Gold, on the other hand, holds intrinsic value. The USD has value because the US government backs it. Gold, however, is valuable because it is rare. Some economists believe that an economic collapse would make precious metals the only useful currency. 

There’s some disagreement out there on this point, and we understand why. In the case of a disaster bad enough to destroy the value of the United States Dollar, amassing a gold stack is going to be the last thing on any trader’s mind. 

Still, stacking gold just to be more prepared for the future is one of the biggest reasons people buy gold. 

Best Practices: How to Buy Gold 

Now that we know some of the greatest reasons to buy gold today, let’s end our guide with a few tips on how to buy gold. Whether you’re buying gold coins and bars for the first time or the hundredth, you’ll want to keep these pieces of advice in mind. 

Comparing Premium Prices

Never take the first deal you see on a gold coin or bar. We always recommend that investors look over several dealers before settling on one to do business with. Over time, your goal should be to establish a close relationship with your bullion dealer. 

But for the first purchase you make, you’ll want to carefully compare prices by looking at multiple gold shops and dealers. Some dealers may mark their coins up using outrageous premiums. If you shop around, you might find your favorite coin at a considerable discount. 

RCM 1 oz Gold Bar
Royal Canadian Mint 1 oz Gold Bar

Hero Bullion offers a wide range of gold coins and bars to help you grow your collection, and our competitive pricing model will keep you from breaking the bank as you buy gold. 

Finding the Right Gold Product 

Aside from shopping around at multiple coin dealers, we encourage gold investors to think seriously about their options. 

Gold coins and bars are the two main ways to invest in gold. But which is the better choice? We don’t have time to go over 7 reasons to buy gold bars or coins. Still, let’s take a brief look at how to decide between gold bars or coins. 

Gold Bars or Coins: What’s the Better Investment? 

Gold bars and coins both offer considerable advantages, and they each come with their own drawbacks. 

Gold bars don’t feature the brilliant designs etched onto many gold coins, but they also come with a much lower premium over spot. If you’re looking to save money while buying gold, we always recommend gold bars. The tradeoff here is that gold bars also boast lower numismatic value, which makes it harder to use them to diversify your existing precious metals portfolio. 

What are the best reasons to buy gold coins? Gold coins are sold at a higher premium over spot, so expect to spend more when you buy a coin versus a gold bar. However, some investors consider the numismatic value and beauty of a gold coin to be well worth the cost. 

Still want to learn more about how to compare gold coins and bars? Check out the comparison chart below:

Gold Coins Gold Bars
High Collectible Value Low Premiums Over Spot
Beautiful Designs Classic, Stackable Look
High Liquidity Low Space Requirements
Lots of Variety High Recognizability

Final Thoughts: Best Reasons to Buy Gold 

There are several impressive reasons to buy gold. For generations, gold bullion has been the go-to for investors who want to diversify their portfolios, increase their profits, and protect their assets against rabid inflation and rising interest rates. 

Is gold right for you? That’s a decision only you can make. When thinking about whether or not to buy gold, consider your risk tolerance, time horizon, and general investment preferences. 

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About The Author

Michael Roets is a writer and journalist for Hero Bullion. His work explores precious metals news, guides, and commentary.