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Bonds vs. Gold: Which One to Choose?

Three gold bars with identifiers on them.

Investments are a safety net that help you futureproof your savings. Choosing the right type of investment that fits your time horizon and risk appetite is the key to benefiting from healthy returns.  

Choosing between securities, such as bonds or precious metals, has always been tough for investors. While both have their advantages, some disadvantages may be worth considering before you make a decision.

Let’s look at a few pros and cons of both kinds of investments.

Gold: Pros and Cons

Gold is a great store of value as it preserves wealth. This feature also allows it to be a great hedge against inflation, as changes in interest rates do not affect the return gold gives on your investment. In fact, your gain on holding gold or gold-related assets highly depends on an increase in their intrinsic value.

Gold is also a great asset to invest in to diversify your investment portfolio. Since this precious metal is inversely related to interest rates and is unrelated to stocks, commodities, or bonds, a declining capital market will safeguard a part of your portfolio.

Investing in gold is great, but most investors have to wait over long periods to realize profits. Its value doesn’t change with prevalent market conditions, which means that when stocks and bonds are performing well, gold prices might not move up accordingly. Additionally, investing in physical gold comes with storage and private vault storage expenses, which can be hefty.

A bunch of gold wafers stacked

Bonds: Pros and Cons

Bonds are income-generating assets that are more reliable than gold investments. They provide a better ROI due to compound interest and move with market conditions. According to data produced over the past three decades, the Dow Jones Industrial Average (DJIA) grew a little less than a soaring 1000%.

Some securities, such as government bonds, cannot be withdrawn till the instrument has matured completely. For instance, some 5-year bonds can only be redeemed at the end of their period.

Securities are tax deductible which may cut into your capital gains. Even though the minimum investment in stocks and bonds is much less than that required for gold, higher service and tax charges carry the risk of cutting into healthy investment returns.

There is no right or wrong answer when deciding between bonds or gold. Both investment types have their own pros and cons as a hedge against inflation to safeguard your wealth. A healthy portfolio mix between stocks, bonds, and gold is recommended by industry professionals.

Call The Gold Investment Pros!

At Orion Metal Exchange, we offer opportunities to help secure your retirement with gold and silver. Our experts have years of experience in the industry and assist our clients with precious metal exchange opportunities. We post live product pricing all day on our website for transparency with our clients.

If you want to learn how to invest in gold, contact us for more information on the process. You can also find out more about our products or click here to learn more about what we do.

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