Gold is an attractive investment for many investors because it has long been viewed as a safe haven asset that protects against inflation and financial crises. Some experts recommend allocating up to 10% of a diversified portfolio to physical gold and gold-backed investments. To make the most of your gold investments, work with a dealer you can trust for honest advice and fair prices. A good dealer will be able to help you find the best products for your particular needs, as well as explain any taxes that may apply.
Investors can purchase physical bullion coins and bars and store them themselves or in a depository, or invest in gold mining companies via stocks and exchange-traded funds that hold physical metal in vaults on your behalf. Dealers also sell derivative products that enable speculators to bet on the price of gold by selling futures contracts or options to buy or sell bullion at certain prices on a specific date in the future.
Diverse industries generate consistent demand for gold, including electronics, jewellery, finance and central banks. In addition, rising wealth in developing countries drives market growth, as gold jewellery is seen as a symbol of status and tradition. Gold’s unique properties also encourage its use in new technologies such as green energy, computing and medicine.
While it is not a profit-generating asset, gold is an excellent way to diversify your portfolio because of its low correlation with other financial markets. It is also a stable asset that provides diversification against other currencies and assets, such as equities and real estate.
The global prevalence of money laundering and terrorist financing through precious metals has prompted financial watchdogs to introduce laws similar to those in financial institutions. Consequently, gold dealers must implement robust anti-money laundering (AML) screening systems to avoid being used for criminal activities.
A key AML risk in the gold industry is its high liquidity and global acceptance. These characteristics make it easy for criminals to hide their identity when buying or selling precious metal, making it easier to commit monetary crimes such as money laundering and terrorism funding. In addition, the anonymous nature of gold trading makes it hard to monitor transactions and track suspicious activity.
Dealers who fail to follow AML guidelines face fines and even license revocation. In the US, the Financial Crimes Enforcement Network (FinCEN) requires gold and other precious metals dealers to follow Bank Secrecy Act regulations. These include reporting all transactions and conducting AML checks on buyers who conduct deals over $50,000.
Before you buy from a gold investment company, it is important to ask how they get paid. Some dealers pay commissions to salespeople and are not obliged to have your best interests in mind. Moreover, be wary of advertisements that are designed to instill fear about the economy. Lastly, ask how much experience the dealer has in the coin industry and whether they offer guarantees or warranties on their products. A reputable Akron gold dealer will have a history of honesty, transparency and quality.