Gold is a popular choice for both experienced and novice investors because it’s more stable than other currencies. It’s also inflation-proof and tends to not be as affected by recessions or the ever-changing geopolitical climate. As with all investments, however, it’s important to be careful and know what you’re doing. Gold can be a nice addition to help diversify your profile, but no investment is without risk of course.
Here are five reasons to invest in gold.
Gold retains its value
One of the reasons to buy gold coins is that they generally retain their value.
Gold even retains its value in times of financial or geopolitical uncertainty, making it a safer investment than local currency or the stock market. It actually increases in value in times of crisis because many people see it as a more stable investment especially when they don’t trust their local government.
It’s seen as similar to hiding all your cash under your mattress where nobody can get to it.
Reduction in supply
Investing in gold can be a good way to earn extra cash due to the reduction in supply. The production of gold is on the decline. This is due to the lack of gold being mined.
When there is less gold being produced it tends to rise in value. There will never be an unlimited amount of gold.
Increase in demand
As the production of gold decreases, there is a steady increase in demand for gold.
Gold is an important part of Indian and Chinese culture, for example, and there will always be a demand. It’s primarily used for jewelry in India and weddings. In China, it’s seen as a stable investment and many people choose to save their money in gold bars.
It’s also bought and sold in many other countries across the globe.
Diversify your investments
If you’re investing your money it’s good to diversify your portfolio.
This means spreading your budget out over different types of investments that will be affected differently in times of geopolitical crisis, for example. Gold is a nice addition to your portfolio in this sense as it won’t react in the same way as stocks or bonds or property.
Here are some useful tips on how to diversify your portfolio. Try not to keep all your eggs in one basket, and you’ll be more likely to profit from your investments.
More reliable than local currency
Many people choose to invest in gold rather than in local currency.
Forex trading is still a popular trend, but you need a certain level of knowledge about the foreign exchange market. Many geopolitical factors affect the exchange rate between currencies, for more information here is a beginner’s guide to Forex trading.
The local currency can fluctuate and be stronger or weaker depending on the current economic situation. This is why people often opt for gold instead as it less affected by the changing state of the economy in this way. It’s seen as a more practical investment overall.