With the recent volatility in financial markets, many investors are looking into alternative assets like gold for portfolio diversification. 18k gold in particular has attracted attention given its high purity and intrinsic value. However, there are also liquidity and other considerations when investing in 18k gold. This article provides an overview of the pros and cons of 18k gold as an investment.
18k gold retains value due to high purity and intrinsic value
As an investment asset, one of the main appeals of 18k gold is its inherent value and purity. 18k gold consists of 75% pure gold and 25% other metals like copper or silver. This high gold content gives it a high intrinsic value that is retained even in times of market turmoil. Historically, gold prices have been relatively stable compared to stocks and tend to rise during recessions or times of uncertainty as investors flock to safe haven assets. So the high gold purity of 18k provides a stable store of value.
18k gold has lower liquidity than paper gold products
One downside of investing in physical 18k gold compared to gold ETFs or futures is lower liquidity. Selling physical gold often involves delays in assaying, shipping, and securing buyers. Large sell orders can also move market prices of physical gold. In contrast, paper gold products are standardized and can be quickly bought and sold on liquid exchanges. So investors need to account for lower liquidity and potential price impacts when investing in 18k physical gold.
18k gold jewelry has additional craftsmanship value
18k gold jewelry can provide additional value over gold bullion because of craftsmanship and design. Top jewelry brands that use 18k gold can command significant price premiums for their products. This results in a dual value – from the high gold purity of 18k and the brand craftsmanship involved. However, some portion of the value is intangible and based on brand image. So investors need to be comfortable with this additional subjectivity when investing in 18k gold jewelry.
18k gold provides portfolio diversification and stable intrinsic value from its high gold purity, but has lower liquidity than paper gold products. 18k gold jewelry offers additional value from craftsmanship but more subjectivity.