10 reasons to Invest in Gold
Table of Contents
Introduction
Gold has been everyone’s favorite metal for investment because, for the past several years, Gold has been valued among the most precious metals on the earth.
Most people invest in Gold to protect their wealth because the value of Gold never goes to zero.
In this blog, we will discuss 10 reasons to invest in Gold and try to understand the fact of investing in Gold. We will also analyze the past historical performance of Gold and the interest people got when they invested in Gold.
We will learn how Gold can help you hedge Diversification against inflation and why Gold is considered a haven asset.
1.Gold help in Diversification
Diversification, in simple words, means that one invests money in various asset classes to gain the maximum return and minimize the risk associated with the portfolio.
The market volatility has a very low impact on Gold, so many offers to invest in Gold to protect the wealth against inflation.
If you invest in physical Gold, there is no way that any stock can influence the price of your physical Gold, and it has been a history that the return on the Gold investment has always been positive.
2.Hedge against inflation
Inflation, in simple words, is the increase in the price of goods and services over time.
The average inflation rate in India is 7.5% per year, and the average inflation rate in the United States of America is 3.8% per year.
Let’s understand it within a simple example.
Assume that the price of your pot is $100 in India and the United States of America in the year 2023.
Now the same port will cost $107.5 in India and $103.8 in the United States of America in the year 2024.
Now, this is where the Gold saves you from inflation. The average inflation on Gold in the 6.5 percentage, almost saves your wealth from vanishing.
Gold maintains its value throughout the year, so most people think that Gold can be a hedge against inflation.
3.Gold act as a haven asset
Gold has been considered a haven asset because other stocks’ value has a negligible effect on Gold. Meaning the value of Gold remains almost safe.
During the severe financial crisis of 2008, the stock market price dropped to almost zero. Making a sharp fall in the market.
When the market crashes. People rushed to save their wealth by investing in precious metals like Gold.
One of the best reasons people invest in Gold is its limited supply. Thus, the price may increase, making a haven asset for the future.
4.Gold as a Tangible asset
In simple words, the meaning of Tangible assert is “the physical form that can be touched, seen and held.”
While in the case of other stocks, they can be seen in electronic form, but one cannot touch them; hence they are known as Intangible assets.
The main advantage of investing in tangible assets is security because tangible assets like Gold cannot be manipulated or devalued.
Another advantage is that the owner controls the assets and investments.
Some examples of tangible assets are real estate, commodities, and metals like Gold.
5.Global Demand for Gold
The global demand for Gold is the key reason why the price of Gold will increase.
As the fashion industry has grown fast in recent years, the demand for Gold is also increasing since Gold is used to make fashion jewelry worldwide.
Another reason the price of Gold is stable and may increase is because of the investment market since many investors consider Gold a haven asset that can save their wealth.
Central banks are the major gold buyers. Hence making Gold a haven asset and protecting Gold from devaluation.
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6.A limited supply of Gold
The supply of Gold is fixed and cannot be changed, unlike paper currencies that can be printed in any number.
The majority of the Gold available in the world is already mined, and only a small amount is produced each year, making the supply of gold constant. Hence, prices increase, and most people think investing in Gold will be the best way to save wealth.
7.Central Bank reserves gold
Holding Gold by the central bank is practiced in many countries worldwide to diversify its assets.
At the time of financial instability, this Gold can protect the country because it has high liquidity.
Central banks invest in Gold through physical gold bars, and high-security vaults securely protect this Gold.
As per the report It is estimated that the United States of America alone holds 8,133.5 tons of Gold.
Some other largest Gold reserve holders who invest in Gold are Germany, Italy, France, and China
8.The potential of high returns on Gold
If one wants to invest in Gold for the long term, then there is a high chance that they will get high returns.
The price of Gold can fluctuate when you plan to invest in it over a short period; thus, it is better to think of long terms.
Because when we look at the history of the gold price, we can assume that Gold has given high returns.
9.Invest in Gold can beat inflation.
Are you a regular investor in the stock market? Then you might have heard about the inflation hedge.
In the 20th century, the value of the US dollar was down by 95%; however, the price and the value of Gold increased significantly, saving the wealth of the investors who invested in Gold.
Th may be the main reason why most people love to invest in Gold so that they do not need to bear the pain of wealth loss at the time of high inflation or market crash.
10.Emerging market demand for Gold
As the knowledge of investments is spreading among people worldwide, they are also looking for safe investments.
The best reason why most people invest in Gold is that it can beat inflation, has the potential for high returns over a long period, and is a highly liquid asset.
It is a known fact that the price of Gold will increase because the demand for Gold in the fashion industry is high.
Conclusion
In conclusion, Gold is the best safe investment to beat high inflation and create safe wealth for those who love investing in Gold.
The main reason the price of Gold is increasing over time is that it has only a limited supply.
When an asset’s supply is finite, there are more chances that the prices of the asset will increase over time.
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