Gold has not only maintained its value over the ages but has continuously gotten pricier and rarer. Like the kings and merchants of the centuries past, many investors see this and latch on to it for more than its elemental properties. The many benefits of gold can yield to an investment portfolio is certainly not something to be belittled.
Many people though only see gold as a component of jewelry — never realizing that many ways exist that gold can profit them the way it does countless investors. For that reason, here are some important reasons why gold is a good investment:
The Instability of Major Currencies
Anyone who watches the news, especially business news, can quickly pick up on how highly volatile the market is. The value of coins and fiat currency fluctuates every single day. Inflation is also seemingly escapable as you watch the money you worked so hard for slowly decreasing in value.
Unlike the ever-increasing money supply, gold’s rarity ensures you that its value only increases over time. Having gold in your investment portfolio provides security to your assets against the many sudden changes in the financial market.
It Can Serve as an Inflation Hedge
Over the past few decades, investors have recognized gold increasing value as a great counteracting force to the rise of the cost of living. Investors use this to ensure that their overall earnings remain the same or even increases due to the incorporation of gold investments into their portfolio.
Investors do this by buying gold either physically or in the form of non-direct gold investments like Exchange-traded funds or Investment Retirement Accounts (IRAs) — the latter of which has seen an increase in popularity as a great long-term venture.
It Protects You from Deflation
During times of recession or even depression, the purchasing power of paper cash lowers and makes everything all the cheaper due to business being put under economic strain. This is called deflation — an inverse of what happens in inflation. This makes much of your assets next to worthless except one — the shiny element of gold.
In times of deflation, the price of gold soars and increases your purchasing power. Where saving money is good, saving money in the form of gold makes it safer and even profitable.
It Great For Emergencies
There are events in our lives and in the Geopolitical landscape that arise out of nowhere and cause deep panic and distress. In events like these, one might need a little extra source of funds to get by — something that has been tried and tested over the centuries and whose value is a certainty no matter what. Gold is the very source of funds that will never fail you.
Having investments in gold, either physically or in non-direct investments, can serve as an insurance policy in times when things go south. In the unlikely event of a total economic collapse too might render our normal money just pieces of paper and metal. The likely outcome is that the world will revert to gold as the main basis of currency — and those who have gold become out on top.
It Only Increases in Value
One reason why gold has only been getting pricier is because of the supply constraints. Since the early 2000s, the production of gold has been on a decline, and many geologists speculate that gold mines will dry up in the next few decades.
The law of supply and demand states that as supplies of a product get low, and the demand remains high, the price of that product will increase. This, along with the amount of time and money it takes to open a new mine, means that gold is only about to get rarer and more in demand.
It cannot be stressed enough how gold’s rarity and demand make its value only increase with the passage of time. It provides a lot of security in various economic conditions and has served as a viable source of investments in the form of IRAs that act as nest eggs for one’s senior years.
Use Gold Investments to Diversify Your Portfolio
There are a number of investments one can make into gold and, by gold’s very nature, they are easy to grasp for the regular person looking to earn a pretty penny. The first and most common way people invest in gold is by direct and physical ownership. This takes the form of owning several pieces of small gold bars or coins and securing them in a safe or safety deposit box.
Another method is Exchange-traded funds (ETFs) which work the same as buying stocks of a company but here you buy stocks in gold instead. This is a non-direct form of gold ownership that saves you from having to worry about storage. There are also mutual funds dedicated solely to investing in gold and other precious metals. These two options are great for someone looking for something easy and minimal in initial investment cost.
One of the best and increasingly popular gold investments out there is Investment Retirement Accounts or IRAs. These are long-term investments that are great to supplement other retirement investments or to serve as a retirement nest egg on its own. Its addition into one’s portfolio also protects your bottom line earnings from inflation or can serve as an emergency stash that only yields more and more over time.
Gold is truly a precious metal for more reasons than one. Its ability to withstand the eroding effects of time, both literally and financially, allows it to be just the commodity investors of all sorts need in their portfolio. In a question of “is gold a worthy investment or not”, the answer is a resounding “yes, it is!”. Consider adding gold investments in your future financial plans because whether you own it directly or invest in it in IRAs, gold will certainly not let you down.