Most professionals are eternally on the lookout for ways to increase their incomes and protect their assets. Your work may be lucrative, but easy methods of supplementing your earnings are always attractive.
That’s why a lot of entrepreneurs and savvy savers turn to gold investing to boost their bank balance and bolster their profits. Gold has been valued by cultures from all around the world since time immemorial, and its importance has been little diminished by the ravages of time.
If you’re wondering how gold could be of benefit to you, here are five factors that might help to convince you of just how special it is…
Reason #1: Gold Holds Its Value
One of the primary reasons that people choose to invest in gold is because it has a long history of holding its value. Unlike paper currency, which is heavily influenced by extraneous factors, gold is rarely impacted by transient market trends. Indeed, its value often soars when other markets founder, with many investors choosing to use it as a safe haven to weather out the storm.
Reason #2: Gold is the Ideal Hedge against Inflation
Another way that investors choose to take advantage of gold is by using it as a hedge against inflation. Historically it has proved itself ideally suited to this purpose, as its price customarily rises when the cost of living increases. Indeed, since World War II, it has consistently outperformed the real return of the Dow Jones Industrial Average every time that inflation has shown a significant rise.
Reason #3: Gold Responds Well to Deflation
Although gold is a powerful tool against inflation, it has also proven that it fares well when the international economy experiences deflation. Although significant deflation hasn’t been witnessed since the Great Depression of the 1930s, it has performed well historically in these conditions, with the relative purchasing power of gold soaring during this tumultuous period, even as the worth of other assets plummeted around it.
Reason #4: Gold is Nicknamed the ‘Crisis Commodity’
As we have demonstrated above, gold is little impacted by financial uncertainty. However, it also manages to maintain its value in times of geopolitical crisis, and this has earned it the epithet of the ‘crisis commodity’. During periods when other assets are at their most volatile, it outperforms all other investments, making it the perfect safeguard for the amateur portfolio.
Reason #5: Supply Constraints Mean That the Value of Gold is Likely To Rise
Fifthly and finally, despite recent price pullbacks, the price of gold is likely to continue rising. A large amount of the gold bullion traded since the 1990s was sourced from the vaults of global central banks, but this trend slowed dramatically in 2008 when the financial crisis rocked the world. The impact of this occurrence has been exacerbated by the accompanying decline in gold mining since 2000, leading to a significant and continuing increase in the price of this precious metal.