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Are 1-ounce gold bars still a good investment with inflation falling?
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When the latest inflation report was released this week, it offered good news for many Americans. After ticking back up unexpectedly in early 2024, inflation cooled again in June, falling to 3.0%, a drop of about 0.1% from the month prior. This is the third consecutive month-over-month drop and the fastest inflation has fallen since June 2023. And, with each drop in inflation, the rate inches closer to the Federal Reserve’s 2% target, meaning that the likelihood of future Fed rate cuts also increases.
But even if the Fed keeps rates steady at its next meeting, the drop in inflation will likely have a positive impact on a few areas of the economy, including the cost of essential goods like groceries and housing. It’s also a positive development for borrowers, as the Fed has for the last year kept interest rates locked at a two-decade high in an effort to curb inflation. With inflation easing, there could soon be a drop in interest rates, which would provide some much-needed relief for those who need to borrow money.
While declining inflation may be a bright spot in many ways, it could also impact certain types of investments, including gold. Gold investing has had allure for investors over the past year, due in large part to inflationary concerns and economic uncertainties. Now that inflation is on the decline, though, are gold investments — and 1-ounce gold bars in particular — still a good option?
Learn more about how the right gold investment could pay off here.
Are 1-ounce gold bars still a good investment with inflation falling?
The short answer is yes, 1-ounce gold bars could still be a good investment for the right investors, even with inflation falling. That’s because while gold tends to shine during periods of high inflation, its appeal as an investment vehicle extends well beyond its role in that capacity.
For starters, gold is an excellent tool for portfolio diversification — and a diversified portfolio is important even with inflation easing. A well-diversified portfolio is built to weather any type of financial issue and gold’s value tends to move independently of stocks and bonds, so by adding gold to your portfolio, you gain protection against losses from traditional investments due to market volatility.
And, while short-term price fluctuations can occur, gold has historically maintained its value over long periods, making it a reliable store of wealth. So, by investing in gold now, you’re likely to see the value of your gold remain stable and increase over the long term. Gold can also serve as a hedge against currency devaluation, which can remain a concern even as inflation falls.
Plus, global economic challenges are still a real issue in today’s economic environment, despite today’s improving inflation figures — making gold, and, in turn, 1-ounce gold bars, a smart bet. After all, geopolitical tensions and economic challenges that occur in other parts of the world may help to drive demand for gold as a safe-haven asset, so putting some money into this type of gold bar could pay off, even if inflation continues to improve.
And, there are other reasons to consider investing in this type of gold bar, including:
- Ongoing inflation protection: While inflation has been falling, it’s important to remember that economic conditions can change — and you’ll need access to an asset that can protect your wealth when they do. And, since gold is an inflation hedge, it can serve as long-term protection against future inflationary pressures that arise.
- Liquidity: Another big benefit to investing in this type of gold is that 1-ounce gold bars are highly liquid and easily traded.
- Reduced counterparty risk: Unlike many financial assets, physical gold doesn’t rely on any counterparty’s promise or performance, reducing certain types of risk.
Compare the gold investing options available to you online now.
Potential downsides of investing in 1-ounce gold bars
But while 1-ounce gold bars could still be a good investment for the right person, it’s important to also consider the potential drawbacks, including:
- Cost of storage and insurance: Physical gold requires secure storage and insurance, which can add to the overall cost of the investment.
- Lack of passive income: Unlike stocks that may pay dividends or bonds that provide interest, gold doesn’t generate passive income.
- Price volatility: While gold is often seen as a stable asset, its price can still be volatile in the short term.
The bottom line
While falling inflation may change the investment landscape, 1-ounce gold bars can still be a good investment. Their role as a diversifier, store of value and hedge against various economic risks remains relevant, even during times of lower inflation. As with any investment, though, it’s crucial to do thorough research, weigh your options, consider the potential downsides and determine what assets fit best in your strategy. That way, you can ensure that you’re building a well-balanced portfolio that can withstand various economic conditions.
Police arrested a man on murder charges this month, 14 years after he allegedly killed a man in Virginia, but the victim’s body has never been found.
Shane Ryan Donahue, a Virginia man, is presumed deceased, the Prince William County Police Department said Tuesday. He was last seen leaving his parents’ home in Nokesville, Virginia, on March 22, 2010. Donahue, 23, was headed to his house in Nokesville, but never made it there.
Donahue was added to the National Missing and Unidentified Persons System after he vanished. According to records, Donahue did not have a car and regularly got rides from friends. He frequented Washington, D.C., Baltimore, Fauquier County, Virginia, and Northern Virginia.
The case stumped investigators, who followed a number of leads over the years. This spring, detectives reactivated the investigation and started looking at every detail of the case from scratch, officials said. They revisited people who had been interviewed during the initial investigation and reviewed “digital evidence in greater detail due to advances in analytical technology and modern police investigative practices,” according to a news release.
Officers said Donahue was last seen leaving his parents’ home with Timothy Sean Hickerson, now a 43-year-old Florida resident. Investigators connected Hickerson to a burglary at Donahue’s home that happened just days before the Virginia man disappeared.
Detectives got an arrest warrant this month and, with the help of Florida’s Flagler County Sheriff’s Office, Hickerson was taken into custody in Palm Coast, Florida. Hickerson was charged with murder and burglary, is now set to be extradited to Virginia.
Former President Donald Trump, an avowed proponent of tax cuts, is floating the idea of reversing a measure passed during his tenure in the White House that effectively raised taxes for many U.S. homeowners.
In a post Tuesday on Truth Social, Trump suggested he would scrap a $10,000 cap on deducting state and local taxes (SALT) that was passed as part of the 2017 Tax Cuts and Jobs Act — a massive revamp that he has said boosted economic growth.
Now, in the run-up to the November election, Trump said in the post he would “get SALT back, lower your taxes, and so much more,” although he stopped short of offering details. Trump made the post ahead of a speech he’s giving Wednesday at the Nassau Coliseum on Long Island.
Trump’s new proposal for getting rid of his $10,000 SALT deduction cap comes as the presidential hopeful is pitching several additional tax cuts that would, if enacted, reduce taxes for major groups of voters. He’s also vowed to eliminate taxes on Social Security benefits, a pledge that could get support from the nation’s senior citizens, as well as to end income taxes on tipped workers and on overtime pay, ideas that would help lower- and middle-income Americans.
Yet Trump’s reversal on the SALT deduction has sparked skepticism from lawmakers as well as economists and policy experts.
“So … now Trump is against the SALT tax cap which *checks notes* is a key part of the — only — major piece of legislation passed during his administration?” noted Chris Koski, a political science professor at Reed College in Portland, Oregon, on X.
Rep. Tom Suozzi, a Democrat from Nassau, Queens, said in a statement on Wednesday that he is “happy that the former president is saying that he has finally reversed his devastating decision in 2017 to cap the State and Local Tax (SALT) deduction.” He also urged Trump to convince Republican lawmakers to vote to restore the full deduction “if he is truly serious.”
The SALT deduction cap “has been a body blow to my constituents for the past 7 years,” Suozzi added.
Senator Chuck Schumer, a Democrat from New York, wrote on X,”Donald Trump took away your SALT dedications and hurt so many Long Island families. Now, he’s coming to Long Island to pretend he supports SALT. It won’t work.”
Asked for details about Trump’s proposal to restore the SALT writeoff, a spokeswoman for the Trump campaign told CBS MoneyWatch: “While his pro-growth, pro-energy policies will make life affordable again, President Trump is also going to quickly move tax relief for working people and seniors.”
Here’s what to know about the SALT deduction.
What is the SALT deduction?
The state and local tax deduction allows taxpayers who itemize to deduct property taxes, sales taxes and state or local income taxes from their federal income taxes. Prior to the Tax Cuts and Jobs Act, there was no limit on how much people could deduct through the SALT deduction.
But the 2017 tax overhaul passed under Trump limited the deduction to $10,000 – a blow to many homeowners in states with high property taxes, many of which are Democratic leaning. At the time of the law’s passage, the Treasury Department estimated that almost 11 million taxpayers in high-tax states like New York and New Jersey would forfeit $323 billion in deductions.
Who benefits from the SALT deduction?
Homeowners with high property taxes, such as people in New York, New Jersey and California, were the biggest beneficiaries of the the full SALT deduction.
But some experts also noted that the SALT deduction primarily put more money in the pockets of higher-earning Americans. About 80% of the full SALT deduction had helped people earning more than $100,000 a year, according to the Tax Foundation.
What happened after Trump capped the SALT deduction at $10,000?
The limit has increasingly impacted middle-class homeowners across the U.S. because of rising property taxes and incomes. Some lawmakers have also sought to either repeal or increase the SALT cap, but none of those efforts have borne fruit.
Earlier this year, some lawmakers sought to double the SALT deduction cap to $20,000 for married couples, with the change retroactive for the 2023 tax year. But that bill was blocked in the House in February.
Won’t the SALT deduction cap expire anyway?
Yes, the SALT deduction cap is a provision that’s due to expire in 2025, as are many other parts of the Tax Cuts and Jobs Act, such as a reduction of the individual tax brackets. But Trump has previously indicated he wants to extend the provisions in his signature tax law.
How much would it cost the U.S. to repeal the SALT deduction cap?
It won’t be cheap, according to the the Committee for a Responsible Federal Budget, a think tank that focuses on budget and policy issues.
Eliminating the $10,000 deduction limit “would increase the cost of extending the 2017 Tax Cuts and Jobs Act (TCJA) by $1.2 trillion over a decade,” the group estimates, adding that such a measure would be a “costly mistake.”
Extending the TCJA’s tax cuts would increase the nation’s deficit by $3.9 trillion over the next decade, the group estimates. By adding in a expiration or repeal of the SALT deduction cap, that would grow to $5.1 trillion, it added.
“Lawmakers should not extend the TCJA without a plan to – at a minimum – offset the costs of extension, but ideally the plan would raise revenues relative to current law and help put the nation’s debt on a better trajectory,” the group said in a statement.
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