invest-in-gold

Is it a good strategy to invest in Gold?

Gold is appreciated all over the world for its rich history and value as it has been entwined into cultures for so many years. Gold coins came into existence during 650 B.C. The first gold coins were struck in the reign of King Croesus of Lydia approximately 100 years soon after. 

People have always continued to buy gold for a variety of reasons. Societies and economies have placed a great value on gold, thereby maintaining its worth. This is the metal that most people fall relies on when other currency forms simply don’t work. This means it has some significance as insurance against difficult times. Here are some reasons why you should consider investing in gold. 

History of holding the value

Different from paper currency, assets or coins, gold has always maintained the value all through the ages. People perceive gold as a means to pass on and safeguard their wealth from one generation to the subsequent one. Since old times, people have cherished the exceptional properties of this precious metal. Gold does not corrode and it can be melted using a common flame which makes things easy when you wish to work with it and turn it into a coin. Furthermore, gold has a beautiful and unique colour, totally distinct from other elements.

Inflation hedge

Gold has traditionally been an outstanding hedge against inflation since its price tends to go up when the cost of living multiplies. Investors have observed gold prices ascend and the stock market drop during high-inflation years in the recent past. This is due to the fact when fiat currency suffers the loss of its purchasing power to inflation, it is gold that tends to be priced in the currency units and therefore it tends to go up alongside everything else. Furthermore, 22 karat gold jewellery is perceived as a decent store of value and so people feel encouraged to acquire gold whenever they think that the local currency is losing its value.

Deflation protection

Deflation is described as a period wherein prices drop off when any business activity slows and the financial system is burdened by extreme debt, which hasn’t been observed since the 1930s (though a small portion of deflation took place during the 2008 financial crisis in certain parts of the globe). The relative acquiring power of gold went up whilst other prices fell flat for the period of the depression. This is due to the fact that people preferred to hoard cash, and what better way to hold cash than to hold it in the form of gold coins and gold? 

Diversifying investment

Generally, gold is perceived as a diversifying investment. It is obvious that gold has traditionally served as an investment that adds a diversifying element to a person’s portfolio, irrespective of whether the person is worried about inflation, protecting their wealth or falling off the U.S. dollar. If your main focus is merely diversification, gold is not linked to bonds, stocks, and real estate.

There are advantages and drawbacks to any investment. If you consider gold to be a secure bet against inflation, you can invest in bullions, coins, or jewellery. If your main interest lies in utilizing leverage to profit from ever-rising gold prices, the futures market may be your answer, however, you need to note that it has its own share of risk that is generally linked with leverage-based holdings.Gold must be a vital part of a diversified investment portfolio since its price amplifies in response to occurrences that trigger the worth of paper investments, like bonds and stocks to decline. Though the gold rate today might not look like it is unstable, it has maintained its worth over the long period. Throughout the years, it has acted as a hedge against inflation and the attrition of major currencies, and therefore it is an investment that you can consider investing in.

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