Why should you invest in gold?

Investors should always be trying to diversify their portfolios. This usually entails investing in new assets and investment classes with different characteristics to what they already have in their portfolio. One diversification asset that every investor should consider is gold. Gold has a rich history due to its value and various uses throughout history. Whether virtual trading or buying physical gold, different forms of investing in gold have become equally attractive to investors. Here are compelling reasons why you, too, should invest in gold.

Gold is Superior to Paper Money at Holding Value

So, why do people invest in gold? One of the reasons is its ability to hold its value. While not used as a currency today, gold still works like money as a superior store of value. Gold has been in use as a currency in one form or another for about 3,000 years, which shows that it had value then. With investors wanting to buy or otherwise invest in it, it still holds value today.

This becomes even more evident when you consider the increase in the value of gold since 1900. Since that time, the value of paper money has decreased while the value of gold has remained stable. In fact, people bought gold during the recessions of the 1930s and 2000s since they knew gold would hold its value much better than paper money.

Even though there is a case to be made for instances where paper money grew in value more than gold, a UK gold investment has always been a paper money one in the long term.

Gold Does Not Have a Liability

Most other investments have liabilities where if the liability collapses, the value of that asset does too. Paper is tied to economic activity and when the latter tanks, the former does too. We have seen this happen in our lifetimes with paper money, but not with gold.

Gold is not propped up by anything else and thus does not have liabilities. It just is. This is why gold is often left doing well when everything around it collapses. It is also why people turn to it when things collapse and the price of gold is almost impossible to crash.

Because gold will always have value, you can rely on it for liquidation or additional investments when different assets and investments become undervalued.

The Value of Gold has Historically Increased

Gold prices have been rising for decades while the value of currencies falls around it. It is for this reason that gold has been termed a safe haven. The good news is that you can take advantage of this by buying gold. If you do not have a massive budget, you can start with gold coins.

Gold’s ability to maintain its value and become more valuable over time answers the question “why invest in gold coins?”. You know that the value of gold coins will increase as the value of gold increases.

Gold is an Excellent Inflation Hedge

A reason to why invest in gold bullion is that gold is an excellent hedge against inflation. When inflation increases, the value of paper money decreases. This leads to lower purchasing power, leading to people requiring more money to purchase the same things. Most currencies globally have followed this path, with people able to buy less today with the same amount as they did a few years ago.

Gold does not have this problem and its value has increased in the last year as inflation has too. Gold performs especially well in areas where the inflation rate exceeds the interest meaning that people lose money when they decide to save it.

Also, the annual return on investment of gold has always stayed ahead of inflation. Gold has given investors a profitable investment where inflation has not affected the power of these returns.

Gold is a Tangible Asset

Gold is one of the few tangible investments that one can hold and even keep in their home. This physical nature of gold answers the question “why invest in gold bullion?” for many investors. Being a physical asset gives investors confidence and security in knowing their investment gold UK is not going anywhere.

It also eliminates any middlemen, commission fees, trading fees, and any other complications associated with holding other types of investments. If you are in the UK buying gold, you can even have it delivered to your home and never have to think about professional storage fees.

Another tangible asset often compared to gold is real estate. Although both are physical assets, it is much easier and cheaper to buy an ounce of gold than it is to buy a home. You can walk into a shop, post office, or certain banks and buy gold today. This cannot be said of real estate.

Being a tangible asset also means that gold is not susceptible to the cybersecurity threats that come with the digital storage of certain assets like cryptocurrencies.

Gold is Liquid and Portable

If you own physical gold, you can take it wherever you wish, with some restrictions depending on where you are. Since it is in high demand, selling gold is much easier than selling other assets. If you cannot find a buyer, you can walk into a jewellery shop and have a quote as soon as it is authenticated.

If you cannot find a buyer or find one willing to give you a fair price, you can always hold on to the gold knowing that its value will keep increasing over time.

Gold is Difficult to Destroy

Consider the value of a real estate investment of holding paper currency. Real estate investment depreciates as it succumbs to tear and wear, while paper money loses its value and can be destroyed in numerous ways.

Gold does not rust or corrode, and it would take considerable effort to destroy it.

Conclusion

Gold has been a store of value for thousands of years, and it has become one of the preferred investment and portfolio diversification options. It has unique properties and inherent value that drive its value. Gold is also liquid due to its high demand and ease of selling.

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