Are you looking to invest your funds in a stable and safe bet? Purchasing a precious metal such as gold could be the answer you’ve been searching for. Not only will you be investing in an asset that has been valued for centuries, this ancient symbol of wealth will also play a significant role in your modern portfolio.
Why is this the case? What specifically qualifies gold as a worthwhile investment now? What makes purchasing physical gold a smart idea today? Let’s take a closer look at the three reasons buying physical gold is a valuable investment and collecting opportunity.
1. Gold Maintains Its Value
Gold is world-renowned for a rich history that has transcended cultures for thousands of years. Coins containing gold first appeared circa 800 B.C., with the first gold coins being produced 300 years later under King Croesus of Lydia. Unlike other forms of currency and assets, gold has maintained its value as a symbol of wealth.
Should you wish to sell or trade your gold in the future, you can move forward with the knowledge that it will maintain its value and that there will be a market for it. It makes the perfect artefact to be handed down as an inheritance.
Gold’s true value lies in its tendency to maintain its worth during times of financial uncertainty. It is popularly known as the “crisis commodity,” because people tend to rely upon it as a form of security when fiscal tensions rise; its price tends to see a significant increase when there is a low confidence in government. During such times, it outperforms other investments.
2. Portfolio Diversification.
Purchasing physical gold is a wise choice for diversifying your investment portfolio. The key element to diversification is investing in properties that are not closely correlated to each other. Historically, gold has had an inverse correlation to stocks and other financial instruments. A well-diversified investment portfolio combines gold with stocks and bonds to add security, reducing the overall volatility and risk. This is best seen in recent history:
- The 1970s was great for gold when its value went from a $35 trading value in 1971 to $850 by the end of the decade, but terrible for stocks.
- The 1980s and 1990s saw a boon in stock prices, but saw gold prices plummet.
- 2008 consumers flocked to gold as stock prices dropped substantially.
This tendency to move independently from stocks and bonds, adds a much-needed balance to your portfolio leaving you with no reason to fear the NYSE. During an economic downturn, precious metals will serve as a comforting, stable force among your investments.
3. Increasing Demand for Gold
The recent increase in wealth of emerging market economies has boosted the demand for gold. Many of these countries have cultures that are intertwined with the importance of gold.
One such country is India, one of the largest gold consumers in the world. Indians have many uses for gold, including making jewelry. Thus, during Indian wedding season in October, there is an increasingly high global demand for gold.
Demand has also grown amongst investors as people begin to use gold as an investment class to allocate funds.
How To Invest In Gold
Now that you have an understanding why investing in gold is a wise choice, here a four ways to invest.
- Buy bullion or gold coins from an established, well-respected retailer. Consider working with Twery’s for an enjoyable experience buying gold. Twery’s is a family owned business with a team comprised of trustworthy retailers committed to excellent customer service. Stop in to our store today!
- Crystal Ball Bets – With this option you can invest in gold on credit to leverage your investment. Trading gold futures poses no counterparty risk and has huge liquidity.
- Gold Exchange Traded Funds – Add gold to your portfolio without the need for purchasing physical gold by investing in an ETF. Three popular options are: SPDR Gold Shares (GLD), iShares Comex Gold Trust (IAU) or ETFS Gold Trust (SGOL). This is a less expensive option in comparison to purchasing physical gold and is well-suited for inexperienced investors.
- Gold Miner Stocks – Mining stocks is one way of leveraging higher gold prices through corporations. This is a risky option as gold miners trade with the broader equity market.