In the last few decades, the price of gold has skyrocketed from under $300 per ounce to over $1,900 today. This rise in price has attracted an increasing number of new gold investors. However, how much should you own? Unfortunately there isn’t a simple answer to this. It is highly dependent on your personal financial situation and your other investments.
For example, if you have a large amount of cash available for investments or if you plan to solely invest in conservative instruments like government bonds or bank deposits – then gold might not be the best investment for you right now. On the other end of the spectrum, if you have a large sum of money to invest (or if you plan to do so in the short term) then investing that money into gold could be a smart choice as well.
Even with all these caveats, we are here to give you some general information about how much gold is owned by American households and what your opportunity cost would be if you were to invest in gold instead of another safer option like bonds or stocks.
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What Is The Average American Worth?
According to a 2017 survey conducted by the Federal Reserve Board, the average American household had $87,000 in liquid assets. This includes cash, checking accounts, and investments – mainly stocks and bonds. Additionally, about 36 percent of Americans own gold outside of their portfolio.
Gold is a relatively safe investment with a low risk of losing value over time. However, it is not riskless and can be lost if you are not careful. If you need more security in your investments and want to diversify your portfolio from stocks or bonds then gold might be the way to go for you.
How Much Does The Average American Own in Gold?
According to the World Gold Council, the average American citizen owns 0.6 grams of gold. This means that if you wanted to invest in gold this would cost you $250 per ounce.
This is a pretty low amount for someone investing in gold for at least the long term. If you were to invest that money into bonds with a 3% return, then your annual return would be $1,000 per year. That’s a lot more than the $250 investment in gold!
How Much Does The Average American Own in Stocks?
Americans have a total of $14.6 billion in stocks and mutual funds.
How Much does the Average American Own in Bonds?
In 2018, the U.S. Census Bureau estimated that around $13.8 million was held by individuals in the form of savings accounts and bonds.
How much Gold Would You Need to Invest to Reach an Equilibrium?
You’ll need about 2,000 ounces of gold to reach an equilibrium. Using this number as a baseline, we can determine how many ounces of gold you need to invest in order to reach that equilibrium point.
To get from 0 ounces of gold to 2,000 ounces of gold, you would have to invest $62,000.
Bottom Line
As of 2017, the average American household has approximately $2,000 worth of gold. This is an increase from the $1,600 they had in 2010 – which is around a 28 percent increase. However, if you were to invest in bonds or stocks, your return would be around 7-8 percent
This means that if you were to use your entire $2,000 on gold instead of investing in something else that would have a higher return rate like bonds or stocks your return would be just over 2% per year. Now this isn’t terrible but it isn’t great either. Additionally, the price of gold could drop significantly in the future meaning that you could lose money on your investment.
FAQ’s
What is the best time to invest in gold?
The current price of gold is far from its value, so it is not a good time to invest in it. If you want to invest in gold, I would suggest to wait for few more months.
You can either wait for the price of gold to go down or do some research and buy some less expensive coins. Like Papa Jim and other cheap eagles.
What are the different types of gold investments?
There are many different types of gold investments. The most common types are:
1. Gold Coins
2. Gold Bullion
3. Gold Mining Stocks
4. Gold ETFs
The first two are physical forms of the metal itself. Coins and bullion both have both practical and aesthetic benefits, but they also have one major drawback – they’re both subject to theft and loss. While this is a concern with any investment, it’s even more important with physical assets like this. That being said, coins and bullion can be relatively safe investments, provided you buy from a reputable dealer or seller. However, if you’re concerned about the safety of your investments or if you have a young family that you worry about keeping safe, it might be worth considering safer investments such as cash or bank accounts instead.
Gold ETFs are another type of gold investment that investors often turn to when they want the opportunity to invest in physical gold without having to physically own it. ETFs are index funds that track the price of a certain commodity (in this case, gold). This means that all the real world price fluctuations that occur in actual physical gold won’t affect your holdings in an ETF-based investment at all. Furthermore, there are also no storage issues with ETFs – you just buy and sell them through an exchange just like any other security. In addition to these benefits, there’s also no minimum investment required to get started with ETFs as well (aside from some minimum initial funds needed to open an account). All this means is that if you want to invest in physical gold without the hassle or expense, an ETF may be the way to go for you.
What are the pros and cons of gold investments?
The price of gold is volatile and tends to be more expensive when investors are nervous about the economy and markets in general. This can make gold a poor choice for long-term investing. The best way to invest in gold is to buy it as an insurance investment and hedge your other investments.
An insurance investment hedges against potential decreases in the value of an underlying asset or liability. Gold is a good example of an insurance investment; it is highly unlikely that the price of gold will ever drop below its current price. Therefore, by buying gold you are effectively hedging the value of your other investments. In other words, if the value of your investments declines, the price of gold will likely rise to offset those losses so that you don’t suffer a total loss.
