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.
In times of political uncertainty
Gold is also able to retain its value during times of geopolitical uncertainty. Many people refer to gold as the crisis commodity since people buy it when the world tensions are high since gold outperforms other commodities during such times. The price of gold usually rises when the confidence in the government is low.
Rising demand for Gold
There has been a rise in the demand for gold as an investment amongst the investors who are beginning to realize that it is an investment class where their funds can be allocated.
Diversifying investments means finding those types of investments that are not correlated closely with each other. Generally, gold has a negative correlation with stocks and different types of financial instruments. The following historical facts can prove this:
• During the 1970s the demand and prices were high for gold but adverse for stocks
• During the 1980s and the 1990s, the shares did well but these years were not very good for gold prices
• In 2008 the stock prices dropped, and there was a sudden interest and an increase in demand for gold by investors
While most investors generally consider stocks as a form of investment, gold is a safe investment. This is especially true when you do not want to take too much risk and do not want volatility, which is the case when investing in stocks.
Nowadays, when there is a lot of volatility, risks, and uncertainty, investors realize the importance of putting their funds towards precious metals such as gold and silver. The prices of gold have generally seen an upward trend, and it is an excellent way of passing on your wealth as well. It is best to buy gold for investment from a gold dealer who would offer real and pure gold at reasonable prices. Gold also has a full sale price in case a person does not want their money to be stuck in the investment or wants to sell it.