7 Essential Reasons to Own Gold

Monday, February 8, 2016, 6:00 AM | Leave Comment

Owning gold is a luxury for majority of society. You’d think a shiny piece of raw material unearthed from the ground would be inadequately exciting and celebrated after more than one hundred years since its discovery.

Nonetheless, gold is here to stay and is something you should be looking to buy into if you want to grow your investment portfolio.

Here are seven essential reasons why you should add gold to the list of assets you currently have or is planning on purchasing.

  1. Proven Track Record

    Unlike relatively nascent markets like exchange traded funds and foreign currencies, gold has a history of holding its value. People see gold as a means of passing on and preserving their fortunes to the next family generation thanks to its proven track record as well as its unique tax advantages.

  2. Hedging against Inflation

    Gold is a great way to combat inflation since its value tends to increase when cost of living rises. In fact, since WWII where inflation levels where at its highest, gold was still able to pull off incredible returns on investment by up to 130 percent.

  3. Protection against Deflation

    Deflation is a period wherein values slump considerably along with business activity and other activities that normally stimulate a healthy economy. The relative buying power of gold has been proven to weather periods of deflation where other assets cannot. A good example is the Great Depression that occurred in the 1930s.

  4. Limited Supply

    As a general rule of thumb in economics, constraints in supply eventually lead to an increase in demand. Much of the gold supply in the market has come in the form of gold bullion. Since 2008, transactions by world central banks has slowed down tremendously along with the production of new gold from mining sites.

  5. Future Demand

    As mentioned previously, limited supply will lead to an increase in demand for gold in the future. Take China as an example. The country’s demand for gold bars has been consistent over the years.

  6. Risk Diversification

    Historically, gold has been known to move in the opposite direction of stocks and other financial assets. Buying either physical gold or gold bullion distributes risk throughout your portfolio. During the toughest economic conditions, having gold in your portfolio can still generate decent ROI.

  7. Liquid

    If you want to sell gold, there are many trusted firms like Rocky Mountain Coin Inc. that can buy the assets from you. If you are facing a financial crisis of your own, liquidating some of your gold can ease the burden.

Overall, gold is a great investment in terms of safety and returns. It can be tricky to manage gold prices, however, during certain times of the year, so be sure to consult an expert regarding when best to liquidate gold to yield the highest ROI.

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