Why You Should Invest in Gold
People buy gold for a wide range of reasons, such as protection against losses in other assets and for security reasons in times of financial crisis. It is because gold is a tangible, private, and liquid asset.
Gold is a unique metal with substantial value. When a person owns gold, he or she can use it as a hedge against both inflation and deflation. Gold is an excellent commodity to cover your finances during an economic crisis.
Gold is secure
The U.S dollar is the most important reserve currency in the world. However, it can lose value over time. For example, we have witnessed the worst currency crisis in 1998 and 2008. When the dollar’s value decreases, you can opt for gold because its value increases during an economic crisis.
Financial reports show that gold prices went up three times between 1998 and 2008. It reached $1,000 an ounce in 2008 and doubled during the period of 2008 and 2012. There are many reasons behind the decline of the U.S dollar, such as trade deficits, large budgets, and a boost in the money supply.
Hedge against inflation
Historically, gold has been an effective hedge against inflation. The reason is that gold prices tend to rise whenever there is an increase in the cost of living. For the last five decades, there has been a substantial increase in the gold price.
It occurs when the currency loses its power of purchase to inflation. In such a situation, gold is priced in the currency units that lead to increased value along with other things.
There is an increasing demand for gold in emerging markets. In the U.S, there are many consumers of gold. Besides the U.S, people all around the world value gold because it never loses its price. People buy gold and store it for a long time. When there is a currency crisis, people sell gold to earn more money.
Moreover, gold is a precious metal used in jewelry, and women buy it all over the world as a fashion accessory. In China, for example, people invest in gold bars to save their money and sell them when their price increases.
The demand for this precious metal has also grown among investors. Many investors see gold as an essential commodity. It has been reported that rich people across the world invest in gold significantly. If you want to pay off your debt and mortgage loans quickly, you should invest in gold and sell it when the price increases.
For thousands of years, people are buying gold because it is a focal point for all savers of wealth. It means people use gold to preserve generational wealth. People do this because they understand that unlike paper currencies, gold will not lose its value.
Some people think that gold prices are volatile, but keep in mind that this is for the short-term. Overall, gold has always maintained higher values over the long term. Therefore, it is essential to invest in gold and get the most out of it.
|Thomas Moore is a proud American with a Bachelors Degree in Business Administration from the University of San Diego. He has been in the financial industry for many years holding numerous licenses in multiple states. He currently helps operate cashkingco.com and is our resident expert on all things finance and a great writer. Thomas is also an avid outdoor enthusiast that loves fly fishing streams in the Western United States. LinkedIn Profile|