Should You Invest in Gold?
There are many ways to invest, from putting money into the stock and bond markets to precious metals investments. For individual investors, there are many distinct reasons to choose to invest in physical gold over paper stocks like stocks.
If you have been considering investing in physical precious metals instead of other major asset classes, you might be interested in why more and more people than ever before have been putting their hard-earned cash into this yellow metal. From gold ETFs and gold mining stocks to actually buying physical gold, there are many reasons to start making gold-related investments, including the following 10 reasons:
#1 – Historically, Gold Investments Hold Their Value
One of the main reasons to invest in gold is that we can see, throughout history, that gold prices tend to hold its value over time. Paper currency and other assets are tightly connected to the economy, and when the economic conditions become extremely volatile and inflation rises, one thing has always been true: gold and other precious metals tend to hold their value, and even rise in value, while cash, stock prices, and other similar securities tend to fall. Gold is very useful, too, and used in gold jewelry, technology, dentistry, and other industries. Owning physical gold can help to protect your wealth in times of economic strife.
#2 – Hedge Against Inflation and Economic Uncertainty
Another amazing reason to buy gold is that it’s a hedge against inflation. People often describe gold as a “safe haven,” during times of high inflation. Unlike paper currency, which can be printed at any time, or stocks, which can literally lose their value overnight (even gold stock), gold has always held its value. It has been used for thousands of years, all the way back to the time of the ancient Egyptians and the Roman Empire, and it’s still used, today, as a form of currency and to preserve wealth.
#3 – When You Buy Gold, You Preserve Your Capital
Gold doesn’t work the same as other investments, like a rental property or dividend stock. It doesn’t give you any type of cash flow, at all, unless you invest in something like stock in gold mining companies, or similar. However, gold investing does give you a way to preserve your capital. This is very important for many people, including retirees, people who want options for long term savings, and those looking to protect the real value of their money.
When global currencies weaken, or inflation starts to rise, owning gold, even a little bit, ensures that your savings are safer. Think of it as a type of insurance policy that doesn’t rely on a bank, corporate profits, or interest rates for its value.
#4. You Can Easily Diversify Your Portfolio
Every investor knows that you should never put all your eggs in one basket. This is why you should always diversify. This means investing in different types of investments. Gold is very different when compared to other asset classes like stocks and bonds. This means that when traditional investments start to fall, pure gold often performs much better. When you add gold to your portfolio, it helps to reduce your overall risk, plus it helps to increase long-term stability. Keep in mind that this isn’t suggesting you go all in on gold and other metals. Instead, it means that you should do your best to have a good balance in other investments from stocks and mutual funds to precious metals and even exchange traded funds.
#5 – Hedge Against Geopolitical Tensions and World Events
If you watch a lot of news, and you watch the global economy when things like war, terrorism, government regulations, worldwide competition, or international tension take place, you will see that stock values might plummet, currency values fluctuate, and investor confidence will quickly deteriorate. Look at gold, though, and even gold futures when these things start to bubble. It is one of the few assets that investors trust when the global landscape begins to become unpredictable. It doesn’t matter if there are concerns over energy shortages, armed conflict or war, or even trade wars. Based on past performance, gold tends to be stable, unlike stocks and other commodities, when things get too tense.
#6 – Gold Isn’t Always Available – There are Supply Constraints
There is only so much gold on the Earth. Paper money can be printed into infinity, but gold cannot. Gold, and other assets on the precious metals market, must be mined. This is expensive, time consuming, and as the current mines get depleted, it becomes more rare over time, and it becomes harder to find. According to statistics, there are about 50,000 to 80,000 tons of gold left in the Earth at this point. That’s not a lot when you consider all of the people and all of the industries that use it.
Because there is a limited supply of gold, and demand continues to rise, especially in places like China and India, where people are starting to see the value in gold investing, the waning supplies will only make it more valuable in years to come.
#7 – Gold is Liquid and Accessible
One of the other things that really set gold apart from other assets is how easy it is to buy, sell, and trade. There is always a demand for gold, whether you buy or sell online or walk up to your local coin dealer in your city.
Unlike other common investments, like real estate or collectibles, which certainly could make you money, gold can be converted to cash in moments…not days, weeks, or months. Gold is accepted almost anywhere in the world, and it has value no matter where you are. This makes it a very valuable, and practical, asset, for those who not only want something stable to invest in, as well as flexible. For this reason, we are strong advocates of precious metals IRA’s.
#8 – Protection Against Inflation
Many say that inflation is a silent killer of savings. Prices continue to rise, and as a result, the value of money declines, and the purchasing power of pounds, euros, dollars, yens and other major currencies, shrink. Historically, people have used gold as a way to protect their wealth against inflation.
During times of high inflation, gold tends to hold it’s value, or even increase in value. We can see this even in recent history. Look at the inflation back in the 1970s, as well as inflation over the past couple of years — gold has absolutely surged, and not long ago, it hit the highest price it has ever been. For those who have concerns about inflation eating into their long-term returns, don’t worry about it. Gold is still one of the most reliable tangible assets available.
#9 – No Counterparty Risk
Many types of investment, including stocks, bonds, or even your savings in a bank, come with something called “counterparty risk.” This means your investment depends on the promise made by another person or entity. This might be a corporation, a bank, a person, or even a government. Gold, however, is a physical asset that you can take physical delivery of, hold in your hand, and directly own. There is no risk to your credit, no risk of default, and now complicated contract behind it’s value. What you see is what you get. This makes gold a very secure option, particularly in a world where banks fail and stocks crash more often than we like to see.
#10. Global Demand and Universality
Gold is one of the few assets that transcends borders, cultures, and economies. It’s recognized everywhere — from Wall Street to rural villages in India. This universal appeal helps keep demand high year after year.
Central banks, governments, private investors, and industries across the globe rely on gold. Jewelry, electronics, and even space exploration continue to drive industrial demand. At the same time, investment demand rises in times of uncertainty or inflation. With such a diverse and global user base, gold enjoys a level of demand and liquidity that few other assets can match.
What About Gold Related Assets Like Gold Mining Stocks?
In general, there is some relation between gold mining stocks, gold funds, and gold futures to commodity prices of gold and other precious metals. However, there are a few things to keep in mind. First, for instance, the Securities Investor Protection Corporation does’t offer protection for futures, so you need to be careful there. Additionally, market volatility can definitely affect stocks, even if they don’t fall as much as stocks in other industries. Portfolio diversification is always the key in any type of investment.
Are Your Ready to Invest in Gold?
If you are ready to buy precious metals, including gold, there are many options out there. We have reviewed many precious metals companies that allow you to buy gold and other precious metals without high-pressure sales tactics. Alternative investments like gold help you to meet your investment objectives and lower your portfolio risk.
Though you may not be able to buy exactly at spot price, the companies that we have worked with have great pricing on gold, and you can create a well-diversified portfolio by taking physical ownership in gold. You can find secure storage to keep your investment safe, and meet your financial goals more easily, regardless of political developments and geopolitical events.
Remember, gold is highly liquid, too, so if you get into a position where you need to sell, you can easily do it…and odds are good that the value will be higher than what you bought it for because gold prices continue to rise.
Is gold right for you? Consider your investing objectives. It is a relatively safe investment for many investors, and if you think it’s right for you – buy gold.