If you’re looking to diversify your investment portfolio, you might be considering gold. If that’s the case, there are many reasons gold could be exactly what you are looking for. From ETF stocks to buying physical bullion, gold gives you many options to fit your specific needs, making it a great addition to your collection. Let’s look at some reasons people decide to invest in gold and the benefits of including gold in your portfolio.
Throughout history gold was the standard, used in the global economy to back currency for centuries. Paper money, on the other hand, is a volatile type of currency. When the U.S. stopped using the Gold Standard, the economy changed, introducing inflation. Inflation caused paper currency to continually lose its value, creating fluctuation in the economy. What you can buy for $20 today is not the same as 30 years ago, even 20 years ago. In this way, gold is vastly different. The value of a dollar has been corroded through inflation, but the value of gold has gone up.
Let’s say you had $100 forty years ago and you had the choice to keep that $100 in paper money or keep an ounce of gold. Which would you choose? In 1980, your buying power with $100 was over double! That amount of money in the 80’s was about $290 in today’s market. As time goes by and inflation rises, paper money loses its value, but gold retains its inherent value. Today, an ounce of gold is worth $1,343.77. For this reason, buyers feel comfortable purchasing bullion knowing they have a commodity with intrinsic value that is not subjected to economic or political pressures like inflation.
As we have seen from the example above, there are times of political and financial insecurity. In those times, currencies can lose their value, like inflation, and sometimes the loss is substantial. It can be hard to imagine a scenario of financial collapse, but it is better to be prepared which is another reason people invest in gold.
When paper currency devalues, gold appreciates. For this reason, gold can be a safe haven in a serious financial crisis. When investors sense a decline in the market, they purchase gold to protect their assets. In a crisis situation, it’s not only paper currencies that fail. Stocks are also in danger. So, instead of keeping all investment money tied in stocks, bullion is a safer bet for investors worried about economic decline.
An example of gold as a safe haven was seen during the Great Depression. When the dollar began to fail, people started trading in their paper currency for gold, leading to gold stockpiles. This caused the president at the time, Franklin D. Roosevelt, to immediately disallow trading in dollars for gold.
While gold can provide security during uncertain times, it also can be used to diversify your assets. If you have a stock portfolio, owning bullion gold is a good way to have a physical commodity in your financial landscape. Owning bullion isn’t the only way to invest in gold. Gold stocks are also popular for investors interested in growth stocks. There is also the option to invest in mining companies which can be profitable even if the price of gold is down. Gold is a dynamic investment with many opportunities and ways people can cash in on its value.
Thinking about buying gold or silver to protect your financial future? Browse our selection of bullion gold options. Our experts are always here to answer any questions or help finding bullion that meets your needs.