Friday, September 13, 2019 / 12:00PM / Content By
Sarah Williams / Header Image Credit: US News Money
Famously known as "the metal of Kings," gold is a precious metal that still has enormous value today. Especially for anyone looking to protect their wealth against unstable governments or the ravages of inflation.
The first appearance of gold coins was almost 3000 years ago. Since that time, people have held gold for a wide variety of reasons. For example, gold is like an insurance policy when governments or currencies fail.
If you are thinking of investing in gold, you will need some reliable information to guide your decision. Below are seven critical facts and benefits of investing in gold.
1. Gold Retains Its Value
Unlike common coins, paper currencies, or other types of assets, gold is known for maintaining its value over centuries. The unique physical properties of gold are also highly esteemed. The precious metal is known for its resistance to corrosion and the fact that it can be melted. This allows it to be worked with very quickly or stamped as a coin.
2. Different Ways to Hold Gold
It is usually a good idea to hold some physical gold in the form of coins or bars. However, there are also other convenient options available for anyone looking to invest in gold. One way to profit from gold is to invest in gold mining shares. This allows you to reap the benefits of gold price increases without the hassle of storing the physical metal. During gold bull markets, mining shares often outpace the price of gold.
If you want to hold physical gold, you will need to decide what form it will take. Gold bars look impressive, but they tend to be quite heavy and awkward to store. You would need to invest in a safe or use a bank to store your gold. If you decide to buy coins, you will need to determine if you want collector coins or freshly minted ones.
When you buy collectible coins, you are paying a premium for the uniqueness of the investment and the scarcity that it represents. Newly created coins are often recommended for those who are not taking up gold coins as a hobby.
3. Hedge Against Inflation
Gold has a well-earned reputation for making a great hedge against the inflation that can eat away at the value of paper assets. No matter what happens to gold, it will retain the value that it took to mine and produce it, while paper assets can theoretically go to zero.
During periods of high inflation in the past, the stock market has often plunged, while the price of gold soared. This is because paper currency loses its purchasing power against gold because gold is priced in that type of currency. People tend to buy gold at an increased rate when their local currencies are plummeting in value.
4. Political Instability
Markets hate uncertainty. Gold is historically known for retaining its value regardless of external political conditions. Whenever there is a political crisis, gold tends to take off. People love the safety that investing in gold delivers.
5. Constraints on Supply
Much of the available gold supply is the result of global central banks selling gold bullion. Generally, when the amount of gold decreases, the price of gold increased.
6. Gold IRAs
Gold-based IRAs are becoming increasingly popular these days. Backing your IRA with gold offers excellent protection for your retirement funds when market changes can implode your overall investment portfolio. The gold IRA is a retirement account that is approved by the government and backed by physical gold.
Traditional IRAs are often loaded with equities from a time when the economy and government was more stable. The global economy is showing signs of weakness. Therefore, paper assets are too much of a risk for many investors. Especially given the events of the Great Recession, the uncertainties of investing in paper assets led to the reduction of the retirement accounts of several people.
A Gold based IRA can offer substantial portfolio diversification that hedges against risks in the overall market. It can also protect your hard-earned money from the forces of inflation and unsound fiscal policy.
7. Higher Demand
Emerging markets, like highly populated India and China, have increased the demand for gold. Gold typically has a more prominent place in the culture of these types of countries. Gold demand in China has been steady among those who view gold bars as a traditional type of savings. In India, gold is highly valued during the wedding season, increasing the global demand for gold.
If you're ready to diversify and protect your wealth in these uncertain times, we encourage you to reach out to us today. Take advantage of the safe harbor that only gold can provide.