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What Does Research Say About Investing in Gold?

Investors choose to invest in gold for a number of different reasons. It helps stay safe during an economic collapse, diversify an investment portfolio, and to enjoy greater profits. Even a little increase in gold value renders a lot of profit.

But what does research have to say about making a gold investment? Out of all the different reasons, research regards gold as the best hedge against currency decline resulting in a stock market crash. Thus, here comes the most valid reason to invest in gold.

Stay safe during the stock market crash

While the investments you made in stocks suffer a blowdown during the stock market crash, it takes a lot of time for them to recover back. To keep your assets safe during the economic collapse, investment experts suggest not putting all the investments in one place.

Most of the investors buy gold to stand firm against a decline in the US dollar. When a currency falls, the prices increase, and thus, inflation happens. Gold also acts as a safeguard against inflation.

During 2002 and 2007, the price of gold increased two-fold. It jumped from $347.20 to $833.75 an ounce. Meanwhile, dollars lost 40% of its value to the euro.

As the 2008 financial crisis happened, gold investment turned out to be the safest investment choice. This is because 15 days after the crash, the price of gold rose dramatically. A lot of investors took their money out of stocks and bought gold.

However, as the crash in the stock market settled, investors were inclined back to stocks.

What makes gold a good investment?

The other reasons that make gold a good investment include:

The most profitable direct investment

Gold is one direct investment that offers the most profit. With a tremendous increase in the price of gold before, during and after the financial crisis 2008, it offered the highest return on investment (ROI) to investors.

Gold experienced a record high rate of $1,895 an ounce in September 2011. So, buying gold as a direct investment proved to be very beneficial. This even suggested future price increase of gold more often, thus greater advantage and higher ROI.

Portfolio diversification

To keep money safe, diversifying your investment portfolio is very important. Gold comes as a great option to diversify your portfolio with a less volatile investment. As the price of gold does not fluctuate rapidly and performs well even in an economic crash, it makes a great less volatile investment choice.

This is especially significant for people growing closer to retirement age. Older people take lesser investment risks as it might take years to recover. To shift to conservative investment options, gold is the safest option. For people interested in precious metals investment, gold is the best metal to diversify your portfolio.

The Takeaway

The history of gold to be used as currency makes it a great investment even today. It has stood the test of time during the shift to paper money as well as all the financial crisis paper currency went through. With lesser chances to lose its value, gold is always going to remain the safest investment option.

Why Invest in Gold?

Unlike currency or other forms of investments, gold has maintained its value throughout the years. Gold can be seen as a way of passing on and preserving your wealth from generation to generation, and since ancient times, people have appreciated and valued its unique properties. Gold does not corrode and can be melted quickly under an ordinary flame, making it easy to transform. Gold is an integral part of a diversified portfolio since the price and value of gold is inversely related to the value of paper investments such as bonds or stocks.

Hedge against inflation

One of the best ways to hedge against inflation is to invest in gold as a precious metal. The price of gold has historically risen when the cost of living has increased. Over the past fifty years, most investors have noticed that gold prices have risen when the stock market has plunged during times of high inflation. Gold is also seen as a store of value, which is why it is encouraged as a form of investment, especially when the local currency is losing its value.


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