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For centuries, gold has been a coveted metal that’s used as a symbol of power, wealth, and currency. It has also managed to remain relatively stable over the years, making it a favorite among many investors searching for a safe investment.
However, the question that must be going through your mind is, can investing in gold make me money?
If this is a concern you have, read through this article and know the reasons why gold is a suitable investment option.
12 Reasons Why You Should Own Gold
1. Gold Is A Safe Investment
Throughout history, gold has been considered a safe investment, especially during a market decline. This is usually the case because, during such times, the value of gold appreciates, whereas other assets are falling.
However, some investors usually deem this to be a fairly risky investment, especially when the market is doing well. Despite this, if you’re looking to safeguard your money when the economy is shrinking, gold is still seen as a safe choice.
This relationship is well illustrated in today’s economy–with the price of gold appreciating to over USD$2000.
2. Gold Yields Better Short-Term Returns Compared to Other Investments
While investments such as the Dow Jones Industrial Average (DJIA) outperform gold in the long-term, gold has the edge over the short-term. This is best illustrated with the price of gold rising by 278% over 15 years, whereas that of the DJIA appreciated only 173%.
This is a sharp contrast to the 839% increase in DJIA compared to gold’s 280% increase over 30 years. Therefore, it’s evident that gold is an excellent short-term investment.
3. The Price of Gold Keeps Rising
Whereas gold is often considered a hedge against inflation, it’s also a salable asset, thereby prone to the market forces where its value either appreciates or depreciates.
During the 2008 financial crisis, the value of gold fell by 31% due to credit restrictions caused by its sale in preference of cash, hence lowering its value.
Nevertheless, this changed in 2019 even before the world was hit by the coronavirus pandemic that leads to the crash of stock markets across the globe. This was evidenced by the value of gold appreciating from USD$1250 in May to approximately USD$1750 per ounce, a 40% increase in less than one year.
4. Gold Is Highly Liquid and Portable
One of the best things about gold is that it’s highly liquid. Therefore, you can liquidate it a lot quicker than other physical assets, such as real estate, by selling it through an online dealer, at a private party, a pawn shop, or a local coin shop. This process usually takes around three business days for the money to be transferred into your account, which is still a lot faster compared to selling stocks through a brokerage dealer.
The amount paid upon selling physical gold usually varies depending on factors, including denomination, purity of gold, market price, and several other factors.
Another appealing aspect of gold is that you can carry it with you across different countries.
5. Gold Is An Excellent Hedge Against Inflation
When looking to make a long-term investment decision, you should always factor in inflation, which is the rate that money starts depreciating as the years pass. Therefore, it’s best to avoid having your investments in the form of money because it loses its value over time, particularly in developing nations.
However, after investing in gold, you don’t need to worry about inflation as it’s more stable, making it a great way to safeguard your investments.
Because of this, many investors usually opt for gold across the globe due to its ability to minimize exposure to risk. However, you need to do a careful analysis of the market conditions and the prevailing prices before deciding whether to invest in gold. By doing this, you’ll be able to examine the market fluctuations and, as a result, be better placed to make an informed investment decision.
6. Portfolio Diversification
Gold doesn’t show any significant statistical correlation to the mainstream asset classes. It’s also argued that gold’s low to negative correlation with many major asset classes makes it the ideal asset as chosen by many investors to diversify their portfolio.
In fact, there’s proof that gold and equities have a negative correlation. This means that when the price of shares depreciates, the value of gold, on the other hand, will rise.
Moreover, the price of gold isn’t affected by the market volatilities caused by microeconomic and macroeconomic factors that affect many of the assets, making it an excellent way to protect your investment portfolio. Therefore, if you want to be less susceptible to market volatiles or lower the risk, gold should be the go-to option.
7. Gold Doesn’t Have a Counterparty Risk
A unique feature about the gold bullion is that you don’t need another party or a middleman to fulfill the contractual obligation.
Furthermore, there’s no need for a paper contract to make it complete. This is due to gold’s unique trait of being the one financial asset that isn’t a liability to another party. This means that in the event of a market crash or crisis, gold will be the most sought-after asset.
Therefore, there’s no better financial asset to have when there are unforeseen downturns in the economy or your country.
8. The U.S Dollar Weakness
It’s no doubt that the U.S. Dollar is among the world’s most crucial reserve currency. Nevertheless, anytime the dollar depreciates, people usually switch to gold as it’s a more stable financial asset.
This will consequently lead to an increase in the money supply of U.S. dollars in the economy, trade deficits, and a considerable budget.
In such times, gold’s value will still be strong and steady, making it the ideal investment move you should make.
9. Gold Is A Superb Way of Saving for The Future
Are you looking to save money for the future? If so, gold also acts as an excellent option as it guarantees you stable and positive returns in the future. Furthermore, unlike real estate, gold is easier to invest because you can start with smaller amounts using your little savings.
When buying gold coins, it’s best to buy them from banks because the quality is guaranteed. However, the price of these gold coins will be marginally greater than the market value because you’re provided with a certificate to prove its legitimacy, something you won’t get after directly buying gold from the market.
If you decide to buy gold from the local sellers, always verify their reputation and the rate that other dealers are selling their gold.
10. Gold Is An Excellent Alternative To Real Estate and Stock Market Investment
A long-term investment in real estate and stock money will yield substantial profits. However, it’s advisable not to use all your savings in these investments because these come with a higher degree of risk.
One of the best investment alternatives you should consider, which remains fairly stable over time, is gold. Moreover, other than physical gold being a great way of saving for the future, you can also use it as an ornament.
Thus, it would be best if you had some gold reserves as its value is relatively steady compared to the real estate and stock market in the long run so that you won’t lose your money.
11. Gold Is a Tangible Asset
Almost everything about the world today is digital, including payment services such as credit cards, bank accounts, and brokerage accounts. This means your assets are prone to get erased or hacked.
However, since it’s a tangible asset, you don’t have to worry about gold. Therefore, you’ll still have possession of your gold even if there’s an internet crash, which means that your life’s well-being is safeguarded.
In addition to gold as a tangible asset, it can’t be destroyed by time, water, or fire. You also don’t need to maintain, fertilize, or feed physical gold, a challenge that you may encounter when owning certain commodities.
Furthermore, since gold deposits are limited, gold has a particular intrinsic value not found in other commodities.
12. Owning Gold Doesn’t Require Specialized Knowledge
Unlike other assets such as baseball cards, diamonds, antique furniture, and paintings, you don’t need any specific equipment, training, or skills to identify gold bullion. Nonetheless, it’s best not to purchase rare gold coins from collectors. Instead, invest in gold bullions.
This is because you’re investing in gold to protect yourself from decreased purchasing power in the event of a crisis and not selling the gold coins at a premium at a future date. It’s also fairly straightforward to buy gold bullion even if you’re new to investing in gold.
Best Ways To Buy Gold
After reading the benefits of owning gold, it’s important to know the best way to buy this asset. By knowing the appropriate methods of buying gold, you won’t easily get scammed or tricked into buying low-quality or fake ones.
Some of the best options available are:
- Gold futures
- Gold bullion
- EFTs owning gold
- EFTs owning mining stocks
- Mining stocks
Gold is a tangible and valuable asset that everyone should look to, especially when they want to diversify their investment portfolio.
If you were skeptical about whether this was necessary, reading through this article has provided you with insights on why it’s vital to invest in gold.
The post 12 Reasons Why You Should Own Gold (Best Ways To Buy Gold) appeared first on DollarBreak.
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