Gold is not only a malleable metal used to make jewellery, coins, crowns and gold bars, but is also very popular as an investment. Many countries over the world have adopted the “Gold Standard” – a monetary system in which the currency is affixed to a certain weight of gold.
Since gold is getting harder and harder to find it is becoming more and more expensive and that makes it a good investment.
If you had bought Gold in the year 2000 today it would have yielded you over a 600% return.
While it has been used as a currency for the bigger part of history, when it comes to online investments Gold is a commodity. 20% of all gold ever mined is held by central banks, which also make use of it as an investment.
There are several reasons Gold makes a good investment:
Protection Against Risk
Gold manages to hold its value even in times of political, social or economic crises.
Adding Gold to your portfolio help you protect against volatility.
Supply and Demand
While supplies of Gold are decreasing demands are only increasing.
This will cause Gold prices to rise in the future.
Gold prices have a low correlation with most asset classes and that makes it a great way for an investor to diversify their portfolio.
Hedge Against Inflation
Due to its great returns, Gold makes a good hedge against inflation and currency devaluation.
While Gold prices aren’t as volatile as other assets’ they do fluctuate. Among the factors affecting Gold prices are:
- Economic stress
- Interest rates
- Supply and Demand
- Geopolitical conflicts
- Short selling
- GDP growth
There are several ways you can introduce Gold to your portfolio.
You can start investing in Gold ETFs, buy physical Gold bars, start trading Gold on the Forex market or invest in companies that mine Gold. Each of these options has its pros. and cons. and you should consider them before taking your first step.