Throughout history, gold has played a key role in many trades and transactions for both the simple trader and the most powerful of nations. Lets clarifies some of the queries regarding reasons why investing in gold is a good idea? or Is gold a good investment? or what are the benefits of gold investment? First smelted in ancient Egypt in 3600 BC, the foundations of its trading began when Lydian merchants came up with the gold coin in 600 BC, under the reign of King Croseus of Lydia. Having been interwoven in countless cultures since then, gold’s rich history has made it a highly valued and respected commodity across the globe even today.
Although it is no longer the primary form of currency these days, gold still holds a lot of weight and is a solid, long-term investment. It can benefit anyone’s portfolio, regardless of their risk appetite — especially in a bear market, where prices are falling. This is because gold is a commodity that investors can fall back on when other currencies are failing, as it will always have value even during tough economic times. Even though this value may not change much over the years, we’ll list 5 reasons why gold should still be part of everyone’s portfolio.
Top 5 – Benefits of Gold Investment
Lets discuss to understand, Is gold a good investment good for you? Just keep in mind that, we should not judge investing in gold is good or bad on the base of physical asset. Now a days, you can buy huge amount of gold certificates as well to avoid maintaining and securing a physical asset. Lets focus below on reasons why investing in gold is a good idea.
It Holds its Value
Gold has been known to hold its own value throughout the ages — something that cannot be said for paper currencies or other assets. For centuries, people have valued the unique properties of this precious metal. It does not rust or tarnish, and given that it can be melted over a common flame, its malleability has made it easy to work with and stamp as a coin. It’s also used in electronics and medicine.
In addition, gold is a visually pleasing commodity. Its unique and beautiful colour is the reasons why investing in gold is a good idea for ancient Egyptians valued it so much that they used it for jewellery and even funeral masks.
Even the price of gold doesn’t truly dictate its value. In other words, if the price of gold decreases its real or underlying value doesn’t change much. This can be attributed to the certainty of supply, given that gold is a commodity. While there are varying estimates of how much gold there is left on earth, having some idea of supply is what helps determine an asset’s price. Thus, knowing that there is only a limited supply available makes it easier to maintain its value.
It’s Easily Accessible
Market accessibility is an important consideration throughout all asset classes, as all types of security have specific barriers to enter the market that can influence how it is bought or sold. Fortunately, the power of a digital marketplace has made gold and other securities even more accessible. To demonstrate, FXCM point out a lot of popular methods through which investors can trade gold, such as forex, spot markets, and exchange-traded funds (ETFs).
Whether you want to acquire physical bullion or trade XAU/USD, all you need to start is a broker, some risk capital, and an internet connection. Our writer Kiran Mehta also outlines that you can start small, and to grab benefits of gold investment, you don’t need a ton of money to start investing in or trading with gold.
It’s Highly Liquid
The historical standing of gold around the world makes it a highly liquid asset no matter where you go. Traders and investors alike respect this commodity as a necessary staple in finance. Not to mention, the very active, reliable, and ready population of buyers and sellers makes the liquidity and universality of gold unparalleled.
This statement is much than enough to answer you, Is gold a good investment? In practice, a physical bullion is readily convertible to cash. Statistics from London Precious Metals Clearing estimate that around 24 million ounces of gold was traded in August 2019 alone, all valued at around USD 36.3 billion (Rs 2.598 trillion). This is an astonishing figure that indicates a continuing robust demand for the yellow metal.
It’s a Great Diversifies
I will now tell you reasons why investing in gold is a good idea? One of the top rules when it comes to investing is to have a diversified portfolio — and gold is a great way to do just that. Aside from having stocks or trading gold or in the forex market, analysts from Alternative Investment Coach suggest keeping 25% of your investments in gold or precious metals.
It’s advisable to have investments that are not directly correlated to each other, and past history has found that gold has a negative correlation with stocks and other financial investments.
For instance, in the 1970s, benefits of gold investment was great while stocks were not. Conversely, the 1980s and 1990s were great for stocks, while gold had a horrible time. Regardless of asset history, it’s still wise to have a diversified portfolio to reduce overall volatility and risk.
It Serves as a Safe Haven Asset
Historically, benefits of gold investment has served as a safe haven asset during times of financial or geopolitical uncertainty. Against inflation, the price of gold rises as the cost of living increases.
This is because gold is priced in US dollars as a commodity, which means that it tends to rise along with everything else. In other words, any deterioration in the dollar will logically lead to a higher price of gold if inflation occurs.
Moreover, regardless of political situations across the world, gold is not at risk of becoming worthless, unlike fiat currencies or other assets that bear risk. Because of this, it is also sometimes referred to as a “crisis commodity,” due to people fleeing to its relative safety when world tensions rise, or when confidence in governments is low.
After reading this article, we hope that you’ve seen the benefits of gold investment. Hope this would have given you an answer, Is gold a good investment for you? While it doesn’t serve as something that can grant you immediate and big returns, it’s still an overall safety blanket and great diversifier.
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