Precious metals such as silver, gold, and platinum have historically been used as the safest way to keep wealth safe, especially during financially difficult moments. Some even like to refer to them as recession-proof assets, especially because they have been proven to perform much better than other assets.
We are currently in a situation of a global financial crisis and an overarching presence of several troubling issues, does that mean you should invest in gold? Just think about it. With the US dollar losing traction due to ongoing geopolitical concerns and the most recent pandemic, many people are deciding to move part of their assets into gold. Will precious metals become your safeguard during these hard times? Keep reading this article to learn more about this precious metal.
Gold Has A Relevant Intrinsic Value
Throughout thousands of years, gold has been a store of wealth. We can almost say it was a unique vehicle for the insurance of wealth and it is the only currency that was able to survive for centuries and that is still traded today. Gold has essentially outlasted every government and other forms of money. Because of its historical intrinsic value and its wealth preservation feature, it is a good idea to protect your savings by converting a part in physical gold.
Investing In Gold Is A Great Way To Diversity Your Portfolio
Having a diversified portfolio is extremely important, as it is an efficient way to lower the expected risk on your investments. Alternative asset classes, especially in the form of precious metals such as gold are becoming more and more popular as essential parts for anyone wanting to own a diversified portfolio. Gold is a preferred choice because of its tendency of being negatively correlated to stock and bonds, That is to say, that gold tends to go up in value when stocks go down. Even if this is not a general rule, investing in gold is a very efficient way to reduce your risk of investment and to improve your chances of getting a greater return on investment. This is especially useful during unexpected periods of unstable economics.
You Can Feel Safe With Gold In Your Portfolio
We are living in a world where geopolitical tensions and social unrest in one country or region can affect the prosperity of the global economy. In our globalized world, it is becoming increasingly difficult to talk about the domestic economy only. Issues both at home and abroad can threaten the value of your assets to go down or even to paralyze. The market volatility nowadays is as high as ever and during such uncertain times, gold can be your haven. It is during such times that gold tends to outperform the majority of the most typical assets classes.
It is common for investors looking to find shelter from the economic instability to turn to gold and other precious metals.
Gold Is A Valuable and Durable Form Of Wealth
We are living in an extremely digitalized world, where privacy is becoming harder to protect and for that reason even more valuable. Among all the forms of wealth available nowadays, some more portable than others and durable. physical gold is one of the most valuable. This is because you can accumulate it and trade it around the world. Gold is relatively easy to convert and challenging to trace. For these two reasons, many gold buyers are attracted to this precious metal as a way to diversify their portfolio and to secure their savings under forms that are not controlled by the traditional banking system.
Gold Has Great Profit Potential
Investing in gold means much more than simply diversifying your portfolio. Wise buyers know that it is easy to make huge gains on this precious metal, especially when holding on it for long. To give you an example, just in 2000 gold was worth around 280 dollars per ounce. Eleven years later, in 2011, during a period of extreme political and economical instability, gold’s value went up to $1,923 per ounce. If you do the math, you’ll realize we are talking about a 600% increase approximately.
Gold Can Be Preserved and Can Protect YourPurchasing Power
The problem of paper currencies is that their value tends to change with the years. National and global debts cause inflation, which lowers significantly the value of paper money. Only in the US, we have a national debt of $19 trillion! However, the good news is that gold is traded in United State dollars, meaning that a decline of the value of the dollar generally results in an increase in the value (and price) of gold. This is an example of how gold can protect your purchasing power and provide you with a valuable form of wealth, even during uncertain times.
Gold’s Value Can Pass Through Generations
Today we are faced with several options to pass wealth to our children and secure their futures. However, as you might already know, to pass or transfer assets between generations might result in other financial burdens such as tax consequences or in the loss of value, which diminishes what you left to your family. With gold, the problem is virtually solved, as it has the power of maximizing your financial legacy, all through processes that are very discreet and have your privacy at interest.
Supply And Demand Do Affect Gold’s Value
All paper currencies are valuable as long as people think they are valuable. Indeed, as the name suggests, they are mere pieces of paper that have no intrinsic value (unlike gold) and whose value is based on people’s faith in their worth. More paper currencies can be printed if needed. But this does not apply to precious metal. Gold cannot be printed as precious metals are found in a limited amount on earth.
This means that increased demand for gold, cannot result in the production of more gold. Instead, increased demand results in the booming of gold’s value because of its finite availability, which makes it even more precious.