6 gold investing tips you may not have known

When it comes to diversifying your investment portfolio, gold has proven itself to be a timeless and reliable asset. That's why so many investors flock to this precious metal during times of economic uncertainty. Unlike traditional stocks or bonds, gold can be counted on to keep its value in nearly any economy.

And, it offers plenty of other benefits, too. For example, gold can act as a hedge against inflation — a particularly useful quality right now, as the efforts by the Fed to tame persistent inflation are ongoing.

But while there are plenty of unique benefits that can be gained by buying gold, the reality is that there is a lot more to successful gold investing than just adding physical gold bars and coins to your portfolio. 

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6 surprising tips for successful gold investing

If you want to maximize your returns while minimizing the risks of gold investing, here are a few lesser-known tips and strategies that can help.

Diversify beyond physical gold 

While gold bars and coins can be a safe, relatively simple way to invest in gold, there are plenty of other ways to invest in this precious metal. And, for most investors, it can be smart to diversify their portfolios with other gold investments — in addition to gold bullion.

One often overlooked option is investing in gold stocks or exchange-traded funds (ETFs) focused on gold mining companies. Gold-related stocks are stocks for precious metal mining companies and gold production companies, and are easily purchased on most investing platforms. Gold ETFs, on the other hand, hold gold as the underlying asset and track the price of gold. As gold prices increase, the ETF's value increases. 

Both of these investments offer a unique balance of potentially higher stock returns with the lower risk related to this valuable precious metal. That's why it typically makes the most sense to have both gold bullion and gold stocks or gold ETFs in your portfolio. By diversifying outside of gold bullion, you can help minimize the risks while maximizing the returns. 

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Monitor interest rates 

One often overlooked factor that can impact the price of gold is real interest rates. Real interest rates are simply interest rates adjusted for inflation. When real interest rates are low or negative, the opportunity cost of holding non-interest-bearing assets like gold decreases, making gold more attractive. 

In turn, investors should keep an eye on central bank policies and inflation rates to gauge the potential impact on real interest rates, and subsequently on gold prices. 

Understand geopolitical and economic factors 

Geopolitical tensions and economic uncertainty can significantly influence the demand for gold. When there is a crisis or general instability, investors often turn to gold as a safe-haven asset. 

As such, keeping an eye on global events and understanding their potential impact on market sentiment can help you make more informed investment decisions. Factors like political unrest, trade tensions and currency fluctuations can all drive demand for gold as a hedge against uncertainty.

Consider gold in a long-term portfolio 

Gold is famous for its ability to preserve wealth long term. While short-term price fluctuations are common, historical data has shown that gold has consistently maintained its value over extended periods. That's why investors looking to diversify their portfolio and mitigate risks should consider allocating a portion to gold as a long-term store of value rather than focusing solely on short-term gains. 

Beware of emotional investing 

Emotional investing is a common pitfall that can lead to poor decisions — no matter what type of investment you're making. And, the allure of gold's historical significance and perceived stability can cause investors to make impulsive choices, which can be a big misstep. 

It's important to approach gold investing with the same level of rationality and due diligence as you would with any other investment. Setting clear investment goals and adhering to a well-planned strategy can help you avoid making emotional decisions.

Regularly review and rebalance 

Like any investment, the performance of gold can fluctuate over time. Regularly reviewing your gold holdings and rebalancing your portfolio can help ensure that your investment strategy remains aligned with your goals. 

If the proportion of gold in your portfolio becomes too large due to price appreciation, rebalancing can help you manage risk and maintain a diversified portfolio. Most experts recommend holding anywhere from 2% to 10% of your portfolio in gold — but you can determine what makes the most sense for your investment strategy.

The bottom line

Successful gold investing goes beyond the surface-level understanding of buying and holding physical gold. By exploring alternative investment avenues, considering geopolitical factors and keeping an eye on the real interest rates, you can enhance your chances of achieving long-term success in the gold market. As with any investment, though, it's important to conduct thorough research to ensure that you're making informed decisions that align with your financial goals.