Did you know that gold has been found buried alongside human remains dating back to 4,500 B.C.E.? Gold has been a precious material for millennia and not much has changed in the present day. Even during the pandemic, investing in gold surged.
If you have thought about gold investments, now is the right time to start. But what can gold offer and why is it a wise idea to put your money on this precious metal? Let us look at some of the benefits buying gold can offer.
1. Investing in Gold: Holds Its Value
Gold has a history of holding its value. Paper money, coins, and other assets can fluctuate in value but gold is a reliable form of passing wealth from one generation to another. Even during a crisis, gold does not go down dramatically in value and, in fact, people tend to invest in it during hard times.
Learn more about gold’s stability and see how it has managed to retain its value throughout history.
2. Inflation Hedge
When the cost of living increases, gold’s value tends to increase with it. This makes it a reliable hedge against inflation. Even when you see the stock market crash, gold price rises. People see gold as a good store of value and they turn to it when they think their currency is losing its value.
In times when business activity slows in a country and prices drop, causing a deflation, gold’s rates also soar.
3. Diversification of Your Portfolio
To have a diversified investment portfolio, you need to make investments that are not correlated with one another. Gold has always had a negative correlation to stocks, as the 2008 recession showed. In 2008, stocks dropped and gold soared as people turned to invest in it.
If you want to reduce volatility and risk, having a balanced and diversified portfolio is necessary. Gold can make that happen.
4. Decrease in Supply and Increase in Demand
The gold supply from the 1990s onward has mostly come from gold bullion in the central banks around the world but there has been a drop in this supply. Alongside that, more people have become interested in investing in gold, increasing its demand.
Reduction in supply and increase in demand make gold’s prices spike.
5. Protection Against Geopolitical Uncertainty
Gold is often called a “crisis commodity” because it does so well not only during financial uncertainty but also geopolitical uncertainty. When tensions in the world rise, people turn to gold for the security it offers.
If confidence in a government drops, you will usually see the price of gold rise.
Investing in gold is a way to protect your wealth for generations to come. Because it does not fluctuate according to a country’s financial whims, it is a safe and reliable investment to make.
Whether you want to ensure your wealth is not affected by inflation or you want to keep a diversified portfolio, choosing gold investments can provide the safety net you need. You can get more investing tips by turning to our Business page!