Gold; it’s not just for the super-rich anymore. Even regular investors and retirees are buying gold these days so you may wonder whether you should as well. Let’s look at why people buy gold and whether gold is a suitable investment for your financial situation.
Why Gold is So Valuable
Gold is not valuable just because the metal is so shiny. Gold has multiple uses, which makes it particularly valuable in certain circumstances. Gold jewelry is a traditional way to save money and increase wealth. Gold, in its physical form, now is used in the making of electronic gadgets as well, increasing the industrial value of the metal. However, what makes gold so valuable to investors has to do with something else.
Gold is priced against cash currency in an inversely proportional manner. When price of cash, like the dollar or the pound, goes down, the value of gold goes up. When the dollar is performing strongly, the value of gold is quite pathetic. You may wonder why people buy gold if this is the case. That’s because gold is an excellent hedge against currency devaluations. If a recession hits, for example, value of currency will be in free fall. Gold, on the other hand, will go up in value, and thus will protect the owner from potential currency losses.
Why Gold Can be Valuable to You
Physical gold investments are highly encouraged by investors to diversify portfolios. Even if you have a rather vast investment portfolio, it all could be wiped out overnight by a recession, an economic downturn or a political event like the Brexit vote. Gold, in these scenarios, will protect your wealth and act as a hedge against currency losses. All investors, including retirees, are subject to the laws of the market. If you are saving money to buy a house, retire comfortable or for anything else you plan to do in the future, do not bet it all on currency. The economy is unpredictable. So, you must take the necessary precautions to protect your wealth against the coming economic and political upheavals.
It’s important to note that gold is not a regular type of investment. Gold prices are largely volatile, so you will not see immediate returns like the ones you can see with investing in the stock market. Rather, think of gold as an investment in your entire future. No matter how lucrative stock investments can be, if the market crashes it’s all gone. Gold can protect your precious retirement savings and personal wealth from a devastation like the one that occurred in 2008.
You don’t need to buy gold in troves. You can buy gold in bars or coins as you see fit and as you can afford. Gold coins are quite popular as certain approved ones can be used for bartering. Some types of gold coins can be rolled over into IRAs. Keep in mind that you need to invest in physical gold, and not gold stocks or stocks of gold mining companies.
So, if you are a serious investor, the above reasons should convince you to invest in gold without waiting too long.