Gold is a precious metallic element, traditionally used as money and for ornamental purposes. It’s also known to be one of the best investments in history due to its scarcity and stability in times of economic uncertainty.
Gold has long been considered by economists to be one of the most stable assets in terms of net price appreciation in comparison to other assets.
People often choose to invest in gold for many reasons, some of which are listed below.
Flexible Investment Option
The belief that only physical gold can be used as an investment is already outdated. On the contrary, various investment plans are available that directly or indirectly involve gold. Gold IRA is an attractive investment option because it diversifies your investment portfolio and also serves as a hedge against inflation during an economic crisis. Today’s diverse and competitive financial market means there are various gold IRA investment choices to select from. Keep in mind that no two gold or precious metal IRA companies are alike, so choose carefully according to your financial needs, investment preferences, and financial goals. Also, another advantage that comes with gold IRA investment is it will diversify your retirement portfolio on a tax-deferred basis and maintain the tax preferential treatment. For young and elderly investors, it means that they can transfer or rollover a portion of their existing IRA account into a Gold IRA will not trigger any tax implications.
Personal Experience
Some people were scared by the 2008 financial crisis and wanted to limit their losses somehow. Investing in gold seemed like a sound plan since its price remains stable even in times of economic crises. It tends to be favored when there’s a large amount of uncertainty or volatility with regards to other assets or currencies or economic conditions.
For instance, when you have an inflationary environment where people are losing value on their cash/savings accounts, being invested in gold would definitely be considered a wise choice due to its stability.
Globalization
According to statistics made available by the World Gold Council, in the last 10 years, more than 70% of all gold that was mined got bought by central banks and institutional investors around the world. These big economic players tend to be involved in diversifying their asset portfolios and investing in gold may seem like a very sound plan to make them less dependent on other assets such as oil or any other kind of exotic financial derivatives.
It is estimated that Central Bank today owns around 33,000 tons of gold; this is about half of all the available gold in the world, which makes it a very interesting asset for investors.
Attractive Exchange Rates
Gold has been around for thousands of years and its value will always stay stable compared to other currencies. One ounce of gold is worth about $1700 today, which means your investment isn’t going down much in terms of dollars and cents. Because you know how much it costs, there aren’t many surprises like the ones that come with other investments.
Price appreciation
The price of gold has increased significantly over time due to its scarcity and increasing demand from emerging economies where people tend to buy gold due to cultural and religious reasons.
The World Gold Council estimated that the global demand for gold approximates 4,000 tonnes per year, with China and India representing about half of this number. As mentioned earlier, gold has historically been part of people’s investment portfolio either as bars or coins, jewelry ornaments, and in some cases even teeth fillings.
Availability
Individual investors choose to invest in gold through buying physical bars or coins or ETFs (exchange-traded funds); some of them do so because they don’t feel safe with the fiat currency system and prefer something tangible while others understand that gold has an impressive track record when it comes to price-performance and they appreciate its ability to hedge against inflation.
Since it’s a tangible asset, people nowadays prefer buying ETFs (exchange-traded funds) since they make things easier when you wanna sell out your assets and cash out your profits in case you want to do so. Also if we take into consideration that in 2017 central banks were net buyers of gold for the first time since 2009 that definitely signals a bullish trend for this precious metal.
Diversifying and Protecting Retirement Portfolio
It’s not just the young investors, but people of retirement age buy gold whether to diversify their retirement asset portfolio or because they believe in its long-term appreciation potential and safe haven qualities. As mentioned earlier, gold tends to be favored when there’s a large amount of uncertainty or volatility with regards to other assets or currencies, or economic conditions. For instance, when you have an inflationary environment where people are losing value on their cash/savings accounts, investing in gold would definitely be considered as a great alternative to counter inflation and its negative effect on your money.
Other than that, if you want to diversify your assets portfolio you could definitely consider gold as an interesting option due to its historical price performance and relative safety compared with investing in stocks or bonds which would be considered riskier investments.
Counteracting Volatility
Other forms of investment tend to fluctuate quite a bit, so the money you put in can lose its value if you need it soon. For instance, shares on the stock market may rise dramatically one day only to fall back down again. You don’t have this problem with gold because it tends to remain stable over time instead of swinging up and down like crazy. It’s also resistant to inflation (and deflation), which is when prices of goods increase (or decrease). Gold doesn’t change much no matter what sort of market conditions are prevailing at any given time.
Gold has become one of the most attractive options when it comes to investing your money mainly due to various reasons. It has proven itself as a sound investment option for many people due to its history of price-performance; stability throughout times of economic crises; constantly increasing demand from central banks around the world; and its long-term appreciation potential.
Read Also: The Ultimate 401K To Gold IRA Rollover Guide
