The precious metal we know as gold made its place all around the world and is valued by all. The metal-based earned this place on its rich history, and because of being appreciated, gold has become a valuable part of numerous cultures. Gold coins have been used as a currency as early as 800 B.C., and it is what many societies fall back to when other forms of currencies don’t work. People also hold gold for various other reasons; in many cultures, gold is used to decorate a bride and show the affection and wealth of the family.
Gold IRA Companies
However, no matter the form of gold being used, whether it is a piece of jewelry, gold coins, or a gold bar, most of the time, when gold is bought, it is purchased as an investment. There are numerous reasons why, through history, gold has been considered to be a good investment. Today, gold is one of the leading choices when it comes to diversifying an investment portfolio, especially for retirement investment portfolios. This can be quickly done by investing in a company that allows you to safely roll-over your funds into gold or at times silver. Various gold IRA companies have come into the business and are offering a range of rates and options for interested investors.
The investors, however, need to be careful about the company they are investing in since many good companies are some hidden that are scamming their customers. It is, therefore, an excellent idea to do proper research, read reviews, and know every detail about the company you are investing in.
Why Invest in Gold?
This can be quickly answered by discussing a few points, such as:
- Gold has a Vast History: unlike other forms of currency, including paper, coins, and other assets, gold has a good history of maintaining its value over a long time. Gold is often seen as an excellent option to preserve and pass on wealth throughout generations. Its unique color sets it apart from other metals, and its ability to be melted over an ordinary flame and being molded easily has earned gold its high standards in the society.
- The weakness of Currencies: although it is the world’s most crucial reserve currency when the U.S. dollar falls in value, as it did in the time of recession in 2008, it encourages people to invest their money in gold. This is the preferred route many individuals take rather than having their money be devalued just sitting in a bank account. This increase in demand of gold raises the price of gold even further and making it that much precious to own.
- Saves from inflation: gold proves to be an excellent inflation hedge as the value of gold rises with the decreasing cost of money. During times of inflation, it saves the investor from vast amounts of loss if they hold gold instead of cash. When the value of the local currency is declining, people find it an excellent investment to buy gold and sell it at a higher price later on.
- Gold Protects against Deflation: in times of deflation being faced by an economy, the prices of everything drop, and businesses of all forms slow down, the purchasing power of gold stays high as people try to save their money by investing it in gold. The increased demand for gold keeps selling rates high.
- Gold is a “Crisis Commodity”: gold holds its value not just during inflation and deflation but also during times of geopolitical unpredictability. Taking as an example, the rise in gold prices experienced at the time of the European Union crisis; individuals find safety in the value of gold in times as such.
- Decrease in supply: since the decrease in gold mining, most of the gold which was available in the market has been supplied by the global banks selling the gold they are holding in their vaults. When this selling process decreased significantly in the times of the great recession in 2008, the value of gold soared through the roof because of the low supply and high demand. At that time, individuals who had previously invested in gold and had become victim to the recession by losing their money benefited significantly by selling the gold they already owned.
- Increased demand means increased prices: in many countries, gold holds more value than being just an investment; in India, for example, gold is most famous for its use in jewelry making. India being the world’s largest consumer of gold, proves to be a determining factor when it comes to gold prices, especially when the wedding season is at its peak in October, and consumers are buying gold jewelry the most. The increased demand for gold in India raises the prices of gold, making it the prime time to make good on your investment by selling at that time.
- It provides a diversified portfolio: investing in gold also provides the option to its investors to have a diverse portfolio. This means that if the investor is losing money in a particular investment, they will have a backup investment, which is not causing them loss. As the proverb goes, never put all your stones in one basket; if one investment sinks, having a diverse portfolio saves an investor by having an investment, which will rise in value when all other investments might be decreasing.
Over the years throughout history, gold has proven to be a stable and beneficial investment. When the prices of paper money are decreasing, the prices of gold are rising. Therefore, as an investor, whether it is saved for a child’s college tuition or investing to save as a part of your retirement portfolio, gold has proven its place to be a part of that diverse portfolio. Some individuals look at the short term price ranges of gold and are timid to invest in it since the short term prices of gold can prove to be volatile, but when looked at in the longer term, it proves to be a beneficial investment.