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8 reasons why investing in gold is a good idea

Gold is revered throughout history for its aesthetic and monetary value. This precious metal has easy liquidity and is a form of investment people have always depended on for security. Aside from it being a splendid long-term investment, the best part about a gold investment is its increase in value whenever events occur that cause paper money’s value to decrease. If you have always been fond of gold jewelry, here are some reasons why investing in this yellow metal seriously can help you have a safer, more secure future.

8 reasons why investing in gold is a good idea

8 reasons why investing in gold is a good idea

It tackles inflation easily
Gold investment is globally considered as a great hedge option against inflation. It is one of the only investment options wherein the value increases along with the rise in the cost of living. This means that it can help you cope up with the daily cost of living as well. During inflation, when other forms of investments and returns on them see a dip, a prudent investor looks for safe assets and gold can be a great option. An example of the same is the period between 2002 and 2007 when the price of gold rose from $347.20 to $833.75 per ounce. It is during the same period the price of the dollar saw a 40% fall against the euro.

It can be your safe haven during geopolitical uncertainties
It’s not just during financial uncertainties that gold can come to your rescue but even when there are geopolitical uncertainties, the metal holds its strength. In times of a crisis commodity due to escalating issues, people tend to be unable to maintain a steady standard of living just using their regular income. It is during these times that gold investment completely outperforms any other forms of investment. Take the example of a crisis that occurred in the European Union when gold prices saw some major price movements, i.e., the price of gold saw a rise when the confidence in the government was low.

It is scarce and has a huge demand
Since it is a finite source, the supply of gold in the world is gradually shrinking, which means it might be quite tough to find it easily in the future. With mining costs continuously rising and exploration budgets shrinking, fewer gold mines are being discovered. This means that the gold, which is so easily available right now may not be as abundant tomorrow. The annual gold production is decreasing, and the continuous rise in its demand means the price of existing gold will rise tremendously in the later future.

It helps you diversify your portfolio investment
If you are an ardent investor, you would have probably invested in shares, bonds, debentures, properties, and mutual funds, among other investment avenues. According to experts, if the value of shares falls quickly, an inverse correlation can form between equities and gold. Gold is one strong force to reckon with, as it safeguards your portfolio from volatility since irrespective of the micro or macroeconomic factors, the price of gold is not influenced.

It can secure you against any future bank crises
Although the banking system globally is quite strong and has measures in place to secure its customers against crises, it goes without saying that an event such as a pandemic can derail things completely. Now, if that situation occurs, physical gold can come to the rescue. Though you might still want to keep the gold secure in a bank safe or deposit box, you can have some amount of physical gold in a safe place at your house. In order to keep the gold safely in the depository, you might have to pay a storage fee. However, you are ensured that your gold is kept safe no matter what the circumstances are.

It is a tangible asset and an easy form of investment
Unlike many other forms of assets, you can buy physical gold. It is for this reason that investors feel safe with the precious metal. Also, purchasing gold is much easier as compared to other forms of tangible assets such as real estate, which involves a lot of documentation and several other criteria. Another crucial point is that gold can’t be saved digitally, which means no hacker in the world can hack your gold or misuse it in any other form.

It requires no paper contracts
One of the downsides of investment vehicles is that there is a lot of paperwork and not to mention, the presence of middlemen in certain cases. The purchase of gold will involve minimal documentation and you will not need any paper contract. Also, there will not be any middleman to bind you in a contract. This is because gold is the sole financial asset that isn’t a liability of some other entity. Also, physical gold can never go broke or go bankrupt and neither does it default on obligations and promises. So, it goes without saying that in case of a crisis, gold will always have a very dominant stand.

It offers easy liquidity
Not many assets can easily be converted to cash in times of need. Gold can be liquidated at a much faster rate in comparison to other physical assets. Take an investment vehicle like a fixed deposit, which has a lock-in period before which you cannot convert it into cash, unless you pay a penalty. This problem does not occur with a gold investment. However, when liquidating gold, the amount you will get depends on how pure gold is, its denomination, and its market price, among other factors.

If you intend to diversity your portfolio further and already have a few schemes in place, a gold investment can be a great option. All that is required on your part is to make a wise decision on how much gold you wish to purchase and when exactly do you want to go for it. Keep in mind that no matter what risks strike, gold will always offer greater safety, lower risks, and stands a notch above any other investment vehicle.

Disclaimer:
The information available on this website is a compilation of research, available data, expert advice, and statistics. However, the information in the articles may vary depending on what specific individuals or financial institutions will have to offer. The information on the website may not remain relevant due to changing financial scenarios; and so, we would like to inform readers that we are not accountable for varying opinions or inaccuracies. The ideas and suggestions covered on the website are solely those of the website teams, and it is recommended that advice from a financial professional be considered before making any decisions.
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