Why investing in gold may make sense for you?

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Why investing in gold may make sense for you?

From Minaimran Aliseo

Based on all the factors, one thing is clear that gold investment can make your portfolio more exciting and safer against a crisis. If you want to manage your wealth well and avoid sudden changes that cause volatility...

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When you mull over retirement and saving money for it, thoughts about thousands of options spin in your head, making it overwhelming to make any decision. Anyway, you don’t need to feel trapped. You can think of investing in gold for this purpose. It is valuable and has a great history behind it. Golden coins have been there since 800 BC, and pure gold coins made their way about 300 years later during the rule of King Croesus of Lydia. In every century, people treasured gold for one or the other cause. Even today, it’s worth is intact as both economies and societies look upon it. When other currencies fail, its value doesn’t waver as such, making it a savior in crisis times.

Here is a quick insight into reasons that may make gold investmentworthy for you.

Consistency in value

If you compare this precious metal with paper currency, coins, and others, you will realize that its value has remained the same over centuries. People preserve and hand over it to the next generation. In every period, it has enjoyed a unique status for its properties. It is free from the risk of corrosion. Since it can acquire any shape when exposed to common flame, you can use it the way you desire. Its color is another highlight. Then, the atomic and electronic factors of this metal are also noteworthy.

Dollar fluctuations

Despite being a vital reserve currency, the value of the US dollar sometimes tends to slip down. For instance, you can go back to the period 1998 to 2008 for an idea. Due to these fluctuations, people repose their faith in gold, and ultimately its prices increase. Between 1998 and 2008, when US currency was down, the gold price appreciated by three times, reaching $1,000 per ounce. From 2008 to 2012, its price got double, achieving an $1,800-$1,900 mark. The reason behind the fall in the value of the US dollar was budget, trade deficits, and a rise in the money supply.

Investment for inflation

In times of inflation, the cost of living rises, gold price appreciates, and the stock market sinks. The value of gold increases during this time because people hold money in this form.Since it seems to possess a great store of value, people incline towards purchasing gold when the worth of their local currency declines.

A shield against deflation

During deflation, the prices go down, businesses lose steam, and the economy becomes sluggish. An example of this is the Great Depression of the 1930s and 2008 economic meltdown. The global impact of deflation was apparent in the 1930s only. In 2008, it affected only some countries in the world. In those crisis times, the purchasing power of gold got a boost, while other assets witnessed a steep drop. This situation occurred because people held money in the form of gold and gold coin.

Low supply

From 1990 onward, the supply of gold in the market started depending on the gold bars purchased from the central banks of the different countries. In 2008, the global central banks didn’t sell much gold. On the other, there have been production issues with new gold. The gold mining came down to 2,444 metric tons in 2007 from 2,573 metric tons in 2000. However, in 2011, the output bounced back with 2,700 metric tons approximately. Creating a new mine takes about five to ten years. And when supply gets affected, the price of the metal increases.

Diverseness of the portfolio

One of the best ways to diversify your portfolio is by investing in things that have no connection with each other. If you compare the performance of gold with other financial assets, you will notice that when gold had a moment in the 1970s, stocks were down; in the 1980s to 1990s, stocks did well, while gold was weak; in 2008, shares crashed, and people sided with gold. It means if you add gold to your portfolio along with stocks and bonds, you can stand well prepared against risks and uncertainties.

For an in-depth insight into gold investment, you can check goldinvestmentpath.com once.

High demand

In the past few years, the developing markets added to the demand for gold. A lot of these countries have a cultural bias towards gold. For example, in India, people wear gold jewelry and use it in other forms also. Its gold consumption is very high in the world. That's why during the wedding season, you can see a sharp rise in demand. After 2012, there has been a setback in this trend, though. Similarly, people in China buy gold bars as a form of money-saving investment for a long time. The demand for this precious metal has been perpetual there.

Today, investors are also eying gold investment. Evidence of this is the success of SPDR Gold Trust, a widely known ETF entity in the US and a leading holder of gold bars.

Hence, if you bother about retirement savings and wealth accumulation, then you can think of including gold in your investment portfolio for diversification. The gold prices tend to increase when the value of the stocks and bonds spiral down due to specific events. Even though its prices can fluctuate in a short time, it has proved to be steady in the long term. Recently, the Iran-US tension bolstered its price by over one percent, touching $1,550 an ounce mark. Expert observations reveal that gold prices are very close to the six-year high that happened when Chinese President Xi Jinping and American President Donald Trump had met for the discussions around tariffs in September.

Based on all the factors, one thing is clear that gold investment can make your portfolio more exciting and safer against a crisis. If you want to manage your wealth well and avoid sudden changes that cause volatility and instability, then you can keep some amount aside for investing in the precious metal. To find help with identifying the best ways to go about it, you can consult trusted advisors who know the in and out of this market and can guide you in this process through and through.

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