Gold has been associated with wealth and power for centuries now. Gold coins were once used for trade, and now, they are used as a collection item or a means of preserving wealth.
Gold was, and still is, in demand for many reasons, too. This precious metal being something valuable is reinforced by economics, and it's certainly something we can fall back on when currencies fail.
In tough times, gold can be insurance; you will be financially fine. So, continue reading to find out eight great reasons why you should buy gold!
Why Buy Gold? - 8 Reasons to Invest in Gold Bullion
Owning gold bullion is one of the best investments out there in our opinion. You don't have to stress about stock market changes, dividends, or company specific performance.
Gold may not offer returns on investment as owning stock or bonds do, but it offers storing value. No matter how much time passes, gold will hedge against inflation. Decades ago, you could sell an ounce of gold and buy a fancy suit - and you can still do that with an ounce of gold bullion.
Buying gold allows you to retain your purchasing power, as gold prices mainly follow inflationary expectations. Other precious metals store value too, but physical gold has always been the staple for storing value.
That is why gold is one of the things you need to own if you invest a lot in the stock market. Owning physical gold bullion allows you to stay safe and wealthy even with market risks and stock market volatility.
The thing is - there are many reasons why you should be purchasing gold today. Many investors do - but why?
Let's find out.
1. Gold = Money
Gold may not be considered a currency today by western central banks, but it comes superior to any other currency, as it has existed longer than any currency we have today. Many central banks have gold reserves, which further proves its importance.
Gold is a store of value, and you can sell your coins or gold bars anywhere in the world for the same price. This precious metal holds value better than fiat currencies, especially in the past 100 years.
Looking at the value growth short-term, fiat currencies grow faster, but long-term, gold is a much better store of value. The price of gold may fluctuate, but the value is constant. Paper money loses value over time, and gold doesn't.
2. Gold Is a Real Financial Asset
Physical gold is a wise investment and the only one you can hold in your hand, making it a unique, tangible asset. Even if you invest in the exchange-traded funds associated with gold, that gold isn't in your hand, and you will feel the hit in case of an economic collapse as the actual owners of the gold in the ETF are the big Wall Street investment companies. Good luck at getting your gold from them if extreme financial stress hits the market.
Gold is an attractive asset you don't have to take care of, and it's usually not associated with general stock market risks. It may not produce income the way your diversified portfolio will, but it will preserve value.
It cannot be erased, hacked, or destroyed, such as paper currency. It's always advised to store some of your wealth in gold - but no more than 10% of your assets.
3. Gold Offers Privacy
You lose your anonymity if you invest in paper currencies, the stock market, or something similar. Everyone can find out how much money you invested in the stock market and how your balanced portfolio looks.
You still have to report the gold on your taxes, but it offers more privacy than other commodities. Gold is a safe haven asset; nobody has to know you have a lot of gold in the physical form.
Other investments lack this option, so gold is a good investment for many.
4. Gold Is Low-Maintenance
One of the things that has a negative correlation with gold is storage. You will usually have to pay to store your gold in a professional vault, but those fees are usually rather small.
Also, you can store gold in your home, but you will have to secure it properly against theft. Gold is value-dense, and you can easily hold thousands of dollars in gold in your hand. So, a lot of value can be stored in a small space, provided it's stored in gold.
5. Gold Offers Security in Times of Economic Uncertainty
A financial crisis or economic crisis, along with some political tensions, can ruin your wealth. There are several ways to protect yourself against potential issues in the future, and one of them is holding physical gold, and holding some of it in a vault overseas make make good sense.
Holding gold in another country is a safe haven; you can do everything online. With its rich history, gold protected wealth for thousands of years, and it can do the same for you.
If you want protection against geopolitical uncertainty, try adding gold to your diversified portfolio. Vault storage companies can help you stay wealthy even when the banking system is working against you.
6. Gold Requires No Specific Knowledge
Investing in the stock market, rare diamonds, or art requires much specific or specialized knowledge. To invest in some stock, you must be able to see the graphs and understand the past performance and understand its future prospects; to invest in diamonds, you must have a good eye to tell if they are worth it or not, and so on.
This moment is where gold shines, as you don't need to know much about the topic to hold gold. You can buy minted coins or gold bars, but if you don't pay much attention to the collectible value of specific rare gold coins, you shouldn't buy rare coins.
Investors rarely buy rare coins, but collectors do. Speculating the value of a coin may result in a loss if you decide to sell it someday. However, if you want to buy gold bars, you can rest knowing that you are protected in a crisis.
That being said, buying gold is a pretty simple process, and you truly do not need a special skill.
7. Gold Protects Other Investments
Every investor in the world gets worried about the stock market crash. Gold negatively correlates with common asset classes, meaning that gold should grow if the stock loses on value.
So, pick gold if you need something not highly correlated to the stock market - to protect your investments and other assets from other market risks. Gold hedges against market risks, and gold can rise when the stock market falls.
Do note that if you want to buy physical gold, you should buy it according to the size of your investable assets. If you have a lot invested in the stock market, you will also need to purchase a lot of gold.
8. Gold Is Increasing in Demand
The mining companies are producing less and less gold every year. On the other hand, investors want to stay up to date, hedge their assets against inflation and risks, and buy gold.
With a lower supply comes greater demand, which is a positive thing. It means that you will always be able to sell your gold instantly without experiencing any lack of demand for it. In many countries, saving in gold is common - and many investors are following that trend.
To do all this and protect your other investments, you will need to buy the scarce precious metals rather than anything else. Paper gold, such as futures, or investing in the gold stocks will not offer you the portfolio diversification you may have hoped it would. To protect your wealth, you will have to invest in gold bars and coins - and all the pros mentioned above will work to your advantage.
Now that you have all the pertinent information about gold investment, it's time to consider investing in gold. Putting some gold in your investment portfolio is a great way to diversify it, and it can protect you in tough times.
So, all you now have to do is buy gold bullion or good gold coins - we leave the choice to you!