Gold is traditionally considered as one of the best investment options. It was used as currency in ancient and medieval times. Evidenced by gold mining, this precious meta has been prized by humanity for at least 7000 years. It is a mainstream asset and its scarcity increases its demand. There are various reasons an investor should invest in the gold market.
Gold is highly liquid; it is always in demand. Therefore, you will be able to easily convert gold to cash quickly. Banks, investors, dealers, and jewelry makers frequently invest in large amounts of gold.
Usually, there is no lock-in period as such for gold investments. Its price absolutely depends upon its weight and purity.
Economists believe that an investment in gold greatly enriches one’s portfolio. With the passage of time, a number of factors reduce the value of paper currencies. However, gold retains its value. In fact, as the standard of living increases across the world, there is a surge in gold prices.
Investing in gold helps reduce the risks in an individual’s portfolio when the economy goes into a recession phase or when other factors adversely affect the market. Furthermore, economists recommend uncorrelated investments.
An ideal investment strategy combines a diverse portfolio in stocks, real estate and gold to lower overall risks and volatility.
Since 2000, the demand for gold has increased considerably. Countries like China and India are the biggest importers of gold. India has historically been one of the largest gold-consuming nations in the world. The demand for gold particularly surges during the wedding season. The Chinese, on the other hand, are known for investing in gold bars.
Gold has remained valuable for over seven millennia, and if somehow, owing to multiple potential factors, the economy collapses, people will naturally move to gold as the trusted currency standard. In fact, economists call it the “crisis commodity”, for, when the world is on the brink of geopolitical storms and other such events, gold is often the last resort that promises safety.
Interestingly, events which commonly cause stock prices to fall adversely affect gold prices to increase. It is a powerful form of protection during periods of inflation.
The price of gold is likely to keep increasing because it is a scarce resource. Investment in gold is a great way to diversify and hedge your portfolio.