Gold is a well-respected asset worldwide. One of the most popular of the precious metals group that has been interwoven into cultures dating back to ancient times. Gold is one of the earliest traded assets and still provides plenty of opportunities for investors and traders today.To get more news about ospreyfx, you can visit wikifx.com official website.
If you’re thinking about “going for gold” read on for a deeper understanding of why people invest in gold and why 2021 could be the right year to do so.
The Gold Throwback
Throughout history, gold has been considered a trusted and valuable commodity. Despite the real value of the precious metal presenting itself in its negative correlation with the stock market and the positive correlation with inflation its store of value dates back way before the rise of the stock markets.
The precious metal’s power and wealth can be traced back as far as 4000BC. Gold’s rise to finance fame didn’t come until the late 1800s. It was then that the Gold Standard took the limelight meaning societies valued their currency to the price of gold. However, in the 1970s we witnessed the collapse of the Gold Standard, and in its place came fiat currency. For years Gold price remained stagnant but during the 2008 financial crisis Gold price almost doubled. Since then the asset has proved its strength as a hedge and here we bring you 5 reasons why having Gold in your portfolio is a good investment.
5 Reasons You Can Strike Success with Gold
Liquidity
Gold is typically considered to be a highly liquid instrument, allowing traders and investors to buy and sell Gold hassle-free.
Diversification
We have all heard the phrase, don’t place all your eggs in one basket. This infamous catchphrase is very true in the financial markets. A balanced portfolio containing a mix of asset types helps traders to spread risk and reduce volatility. Spreading your horizons will often include diversification assets that are not closely correlated. Historically, Gold has been known to have a negative correlation with stocks and other financial instruments. One clear example of this is 2008 when stocks plummeted, and we have seen investors flock to Gold.
Safe Haven
Unlike other assets like traditional currencies Gold is not directly impacted by interest rate decisions and it cannot be printed to control supply and demand. Gold is considered a safe haven asset because of its scarcity and the fact it has held its value over time. Not only that but the precious metal has proven its worth in the face of adverse economic uncertainty.
Inflation Hedge
Gold prices in the past have appreciated alongside a depreciating dollar, rising inflation, and when the cost of living increases. Over the years Gold prices have climbed and stock markets declined in times of high inflation. So, investors may look to gold as a hedge asset when they believe that their local currency or other investments are losing value.
Wealth Safeguarding
Throughout the ages, Gold has a history of holding its value and has been trusted by many for its wealth preservation attributes. Take for example owning $50 worth of gold 50 years ago and owning a $50 note. Gold has since increased its value and thus far proceeds your initial $50 investment. However, due to inflation the $50 has not grown in value and will not buy you as much as it would have in the 70s. Furthermore, over the last 30 years, Gold has increased by over 500%, so if you invested £2,000 in the metal then your investment could be worth over $10,000.
| By | buzai232 |
| Added | May 3 '22, 07:16PM |
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