The price of gold is currently at its highest rate since November last year, according to Fortune.com.
But with so many people going for gold, is now a good time to do the same? Here are six reasons why gold will always be a good investment:
1. Stability — As Provident Metals points out: Gold is and has always been the world’s most prized precious metal, and though supply may be thinning out, this is unlikely to change anytime soon.
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Investopedia adds that physical gold as an investment is relatively immune to financial and geopolitical uncertainty and because of its “safety” in times of crisis, its price tends to rise with political tensions.
As far as physical investments go, Provident Metals calls gold “inflation proof." In fact, Investopedia says gold is a good hedge against inflation as it tends to increase in value as living costs increase.
2. Increasing value — In August this year, The Motley Fool reported that gold was moving into value territory. It’s a sentiment shared by MarketWatch, Investopedia, and Fortune.com, to name a few.
This recent rise in value comes after a five-year downtrend and, if history is anything to go by, gold will hold its value well in the long term, especially considering the decrease in supply because of costs involved with mining.
3. Portfolio diversity — Whether it’s bullions, EFTs, coins, or mutual funds, Investopedia says gold is a great way to reduce the overall risk of your investment portfolio.
That’s because when diversifying your portfolio, you should always look for investments that aren’t closely correlated. Gold, for example, tends to increase in value and stocks and currency decrease.
U.S. Global Investors CEO Frank Holmes suggests that 5 to 10 percent of your portfolio should be made up of gold. He adds that it’s never a bad idea to add gold stocks to the mix.
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4. It’s easy and anonymous — In a list of pros and cons of gold investment, The Balance points out that it’s relatively easy to buy physical, like in the form of Krugerrands, for example.
Moreover, HuffPost says that whether you’re buying physical gold online or from a vendor, there’s no way for anyone to know how much wealth you have stored up without actually seeing it.
5. It’s less risky than traditional investments — HuffPost reports that retail investment products, such as gold warrants or certificates, are subject to “issuer risk." This means that if the issuer of your investment product files for bankruptcy, you lose your investment.
Buying physical gold to store at home or in a safe eliminates this risk.
Physical Gold refers to “issuer risk” as “counterparty risk," pointing out that in financially unstable times, money may not even be safe in a bank.
But the message is the same: Owning physical gold means your investment isn’t subject to risk from outside influences.
6. A global currency — Gold never loses its inherent value and, as Provident Metals points out, whether you’re in Alaska or Zimbabwe, the value of your gold stays the same.
Ways2Wealth adds that gold stays the same all over the world. There’s only one type of gold and it’s traded and accepted globally.
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