At any point in time, it is a wise decision to invest in gold because among all the different investment class, gold has stood the test of time and given its investors sure-shot returns. It has historic reputation as generator and preserver of wealth for many of the rich and affluent countries and individual families.
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In the last 12 months, the price of 100 grams of goldhas risen from US$ 51300 in Jan 2020 to US$ 59430 and this amount is set to increase in the face of various factors the least of all being the slowdown from the pandemic. We discuss 6 Reasons to Invest in Gold Today -
Gold has historically provided a safety banket against any form of economic uncertainty. It is universally valued even though gold has only been coveted as a precious metal used for making jewelry or as currency. Even though we have entered the era of fiat money, globally the national banks, government and even the International Monetary Fund have held a reserve of gold as the greatest economic stabilizer.
Gold is a proven hedge against inflation because its prices tend to rise as the cost-of-living increases. Over the past fifty years, investors have seen gold prices rise even as the stock market plunged in the high inflation years. As we said, since all money is now fiat currency, when it loses its purchasing power during inflation, gold which is priced in terms of the currency denomination also witnesses a price rise along with everything else. Also, gold has a good store value so people may prefer saving their wealth in the form of gold in the face of inflation.
It has always been observed that when the Dollar prices are low, gold price rises. Whether your portfolio is being affected by market volatility or geopolitical uncertainty, gold offers the best protection. Large investors always invest a percentage of their investment in gold as a hedge against any loss they may incur in riskier investment options. They will at least invest in 100 grams of gold bar as a hedge for their portfolio’s riskier investments.
The gold supply of the 1990s mostly came from the global central bank vaults and it is only in 2008 that this sale stopped. Since 2000, production of new gold from mines have also been declining. In fact, the annual gold output has fallen from 2,573 metric tons in 2000 to 2,444 metric tons in 2007, though there was a brief rebound in 2011 when the production rose up to 2700 metric tons. It takes up to 10 years to bring a new mine into production, hence gold faces supply constraints that far outmatch its demand. The wealth of emerging market economies is also boosting demand for gold, for many of the countries there is a strong cultural linkage with the precious metal. In India and China for instance where gold is the traditional form of saving, demand for physical gold investment is high. In China, there is great demand for gold bars and the countries rising economy implies that the purchasing power is also great, thus increasing the demand for gold.
Generally, when one avenue of investment is facing a slump, another will be performing well. This is true especially between gold and the stock markets. Gold and the stock markets have a negative correlation. In the 1970s, when gold was peaking, stock markets were facing a slump, in the 1980s and 1990s, when the stock markets were growing at an accelerated speed, gold was performing poorly and in 2008, when the share market witnessed a major fall, demand for gold increased and pulled its prices up. Hence, to withstand volatility and mitigate risks it is important to invest in gold and make a diversified portfolio.
Physical gold, especially in the form of coins and bars are easy to trade. When you purchase gold bar in NYC, you can trade it at the latest spot price anywhere in the world, especially if it comes from one of the reputed mints. You can easily find gold bar in NYCvia online trading sites and have the precious commodity shipped to your address and even sell it online or offline for the best price.
