Gold is respected throughout the world for its rich history and value which has been intertwined into different cultures for centuries. Coins made of gold appeared around 800 B.C during the reign of King Croesus of Lydia. Throughout the centuries, people have invested in gold because it’s considered a safe haven of wealth and maintains it’s value in the short and long term. Here are the reasons why it’s a good idea to invest in gold.
Gold has been an excellent hedge against inflation for over fifty years because its price tends to rise when the cost of living increases. Investors have seen the price of gold increase and the stock market fall during high inflation years.
Weakness in currency
Although the British pound is one of the most important currencies in the world, its value rises and falls every year thus prompting people to flock to the security of gold, which in turn raises gold prices. Between 2000 and 2008, the price of gold nearly tripled reaching 700 pounds per ounce. Between 2008 and 2012, the price of gold doubled hitting 1500 pounds per ounce.
Gold saves and preserves wealth in turbulent times hence increasing investor’s confidence in it today. Through the years, gold has been a hedge against inflation and the erosion of major currencies.
Diversifying your portfolio
Diversifying your portfolio is the key to financial success today and in the future. Diversification involves finding investments that are not closely related to one another. Historically, gold has had a negative correlation to equities and other financial instruments. Check this out:
-In 1970, stocks performed terribly but gold performed remarkably well
-In the 1980s and 1990s stock prices went up and gold prices went down
-2008 saw many consumers migrating to gold hence stock prices dropping substantially
A well-diversified portfolio combines other financial instruments such as stocks, bonds, equities, etc. with gold to reduce the risk and volatility. Although the price of gold can be volatile in the short term, it has always kept its value over the long term.
In recent years, increasing wealth of emerging market economies has boosted the demand for gold. In most of these countries, gold is interwoven into the culture. India is one of the largest gold-consuming nations in the world because it has many uses there. For example, the Indian wedding season in October is traditionally the time of the year that sees the highest global demand for gold. In China, the demand for gold is steadfast since gold bars are seen as a traditional form of saving and preserving wealth.
Demand for gold has grown among investors in recent years owing to the fact that gold is viewed as an investment class into which funds should be allocated to.
Where to buy and sell gold
The evolution in FinTech has led to the rise of many online companies around the world which deal with gold.
Among these companies is Goldex which, through the Goldex app, allows you to buy physical gold by simply connecting you to the world’s biggest gold markets and makes sure you always get the best price for your trade, no matter the size. This ethical pricing saves you, on average 8-12%: this is what we call best execution.
Important disclaimer: this document is not an official research report and the views expressed in it are those of the authors. The authors are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000, therefore, this it does not give rise to rights to claim compensation under the Financial Services Compensation Scheme.