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Gold has always been a highly respected commodity throughout the world with coins containing gold dating back to 800 B.C. Gold has been traded for centuries and is still one of the most important investments a person could make. With this being said, there are many reasons to own gold and we have created a list of the top 7.
Paper currency, coins and other such assets often lose their value, but gold is the one commodity that has retained its value for decades. It is often used as a way of passing on one’s wealth from one generation to the next.
Sure, the U.S. dollar is one of the most important reserve currencies in the world,
take the test but when the dollar drops in value, people often flock to gold for its security. There will always be large budget and trade deficits and a large increase in the U.S.’s money supply, and gold will still hold strong and will be one of the best investments you can make.
When the cost of living increases, gold prices tend to rise. This makes gold an excellent hedge against inflation even during those high inflation years that see the stock market plunging.
Just as with inflation, gold offers investors security during times of deflation. When prices decrease, businesses slow down and excessive debt takes over the economy, the purchasing power of gold will increase sharply.
The demand for gold has grown over the years and not just by investors. The jewellery industry consumes just as much gold as the technology industry and those demands are increasing every year. India and China are two of the largest gold consuming nations in the world, often competing for gold with investors looking to increase their investment portfolios worth with the precious metal.
Investing in an inter-connected world today can be tricky as global events almost anywhere can send the markets into a tizzy. A war in one part of the part of the world or a sudden terror attack can send shivers across the investment community globally, triggering a massive downslide. Stock markets all over the world are driven more by investor sentiment than good old-fashioned common sense and stock performance. Strong fundamentals of a company can have little influence on its stock performance if it’s caught in a market downslide.
Here’s the deal
When you by gold and hold it in its real physical form, you offset all these risks. While it’s true you won’t get a 30% return as you would from a technology stock in the middle of a bull run, but you trade that volatility for dependability and steady growth when you invest with a good window of investment. Gold has always generated good returns and will always have value as an asset class. There is also the added security in knowing that your asset is owned by you and in your custody or safe at a location of your choice. As such, your investment is not open to the risk of sudden market action. A good window of investment could mean that you need to hold your asset for 5+ years. Within these timeframes, gold has always appreciated in value and delivered great returns in the long run. In fact, one of the main reasons that people do invest in gold is to protect themselves from market risks associated with other asset classes. Even prime real estate generating good returns over time has been known to react adversely to market forces.
Owning physical gold protects you against issuer risk. If you buy gold certificates, gold bonds or gold warrants, you are up against what is commonly known as issuer risk. This is the risk of the very issuer of your certificate shutting shop and filing for bankruptcy. Unthinkable as it may be, it is a possibility. If that were to happen you would be left hanging on to pieces of paper which would be worthless. In much the same way that stocks of a company become worthless when the company collapses, the issuer filing for bankruptcy could leave you high and dry.
Although there are many more reasons to own gold, these are the most popular. Are you ready to add gold to your investment portfolio To learn more about gold investing, contact the professionals at Physical Gold today! Call us on 020 7060 9992 and talk to one of our gold advisors who can take you through the ropes of buying gold. There are many avenues to consider – coins or ingots Rare coins Let our investment experts guide you on how to expand your investment portfolio and add the yellow metal to it.
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.