3 Reasons Why You Should Invest In Gold

Hi everyone, thank you for coming back to my blog. I hope you found my last blog interesting and useful, where I covered ‘3 Reasons Why You Should Invest In Cryptocurrency’.

In today’s blog, I am going to show you reasons as to why you should also consider investing in gold and make this a part of your investment portfolio too.

Gold has held its value for hundreds of years and because of this, gold is seen as a tangible asset into which investments can be stored and preserved for future generations. Investment in gold often increases in value during difficult economic times and when there is a risk of higher inflation. This is because the value of gold is not usually correlated to the performance of other investments such as those connected to the performance of the stock market. For example, gold saw an increase after the 2008 financial crisis, while the stock market dropped in value, and just a few months ago in the Summer of 2020, gold prices reached record levels as a response to growing economic uncertainties, while the value of the stock market had sharply declined.

These are the reasons why you should consider investing in gold:

1. Gold is a simple way to diversify

The key to diversification is finding investments that are not closely correlated to one another. Gold has historically had a negative correlation to shares and other financial instruments. Recent history bears this out:

• The 1970s was great for gold, but terrible for shares
• The 1980s and 1990s were wonderful for shares, but horrible for gold.
• 2008 saw the stock market drop substantially as consumers migrated to gold.

Properly diversified investors combine gold with crypto, property, shares and bonds in a portfolio to reduce the overall volatility and risk.

2. Gold can be used to hedge against inflation

Historically, gold has been an excellent hedge against inflation, because its price tends to rise when the cost of living increases. Over the past 50 years investors have seen gold prices soar and the stock market plunge during the high inflation years. The reason for this is because, when currency loses its purchasing power to inflation, gold tends to be priced in those currency units and thus tends to rise along with everything else. Moreover, gold is seen as a good store of value so people may be encouraged to buy gold when they believe that their local currency is losing value.

3. Gold can protect your wealth

Since the crisis in 2008, people have paid more attention to their finances and are looking harder than ever for alternative methods of protecting the value of their money. Gold offers a long term safe haven for those looking to protect and preserve the value of their wealth as it will always hold a significant value no matter what.

Gold investment should be viewed primarily as a low risk security asset for yourself and your family’s future and as a non-speculative, safe, long term method of protecting your wealth.

Gold should be an important part of your investment portfolio because its price increases in response to events that cause the value of paper investments, such as shares and bonds, to decline. Although the price of gold can be volatile in the short term, it has always maintained its value over the long term.

And as always, you should only invest once you have done your research first!

Until next time, thank you and stay safe.