Is investing in gold smart? Should you start adding gold to your retirement investment portfolio? Does gold have any unique advantages over other precious metals that you should look forward to taking advantage of? If you have been trying to get the answers to these questions then you are in the right place, because in this article, I will respond to them at length. Read on to discover why investing in gold is still a hot topic even in 2021.
Gold as an investment option
Today, gold investments are still considered among the best investment choices for investors, regardless of their form. Until recently, investors could only invest in gold by purchasing it in its physical form. Those who are interested in gold can in the present-day world invest in it via gold mining company’s stocks and exchange-traded funds. Each of these options is popular amongst different types of investors, who in their own ways are capable of creating impressive investment portfolios.
Like any other type of investment, however, gold has been criticized by those who believe that it is not a good investment option. Whereas some people argue that gold like other precious metals is best left for use in the jewelry-making industry, there are those who perceive this shiny metal as an asset that financially rescues people during economically challenging times. Gold has existed for thousands and of years and has managed to retain (if not increase) its value, owing to its unique intrinsic properties.
A brief history of gold
To better understand why we are even talking about gold as an investment option, thousands of years after it was discovered, it is important to look at its origin and history. In 2000 B.C., gold found its use as a material for jewelry, amongst the ancient inhabitants of our planet. This is still a form of utility that gold has even in the present-day world. As early as 560 B.C., some people had already realized the intrinsic value of gold and had started using it as a currency. Gradually, despite being replaced by the paper as the primary currency, gold has come to be accepted and recognized as a lucrative investment option by many investors from all walks.
Gold and its role in the modern economy
Gold has taken its place in the modern economy as a symbol of wealth amongst those who own it. Beyond that, it has also come to feature as an important aspect of the world economy, as can be proven by the examination of the balance sheets of internationally recognized financial institutions, such as the International Monetary Fund, and central banks. Currently, central banks hold close to 1/5 of all the above-ground ground and are putting in more effort to collect more of this metal.
If the financial institutions that control the flow of money in the entire world are stocking up on gold, then there is reason to also stock up on gold as an investor (regardless of your level of expertise). Below are some reasons why you should highly consider adding gold to your investment portfolio.
Gold as a safe haven
Most investment options are usually affected by the state of the economy. When the global economy is performing poorly, most assets are also usually losing value very fast. Gold is, however, usually increasing in value when the global economy is crumbling down. A look at the most recent global economic crisis reveals some patterns and trends that are hard to ignore as an investor. More often than not, gold has managed to hold its value during such times, making it a go-to option for investors who understand the importance of crisis-proofing their investment portfolio.
Gold as an approach to diversifying an investment
It is no surprise that gold is perceived as a diversifying investment in the present-day world. It has, throughout history, served as a reliable investment option for people, and is doing so even today. When other assets whose price movements are negatively correlated with the price movements of gold are performing poorly due to inflation, and the declining U.S. dollar, gold has been seen to remain steady and to also increase in value. Investors who add gold to their investment portfolio get the opportunity to put a stop to their worries when things are going south in the global economy.
Gold in wealth preservation
One of the top reasons behind financial organizations insisting on purchasing more gold today is that gold has successfully been used to preserve wealth from one generation to the next one. It may not have offered investors the much-needed liquidity during the economic crisis in the past, but we have other forms of gold such as bullion coins, which are easier to cash out whenever the need arises.
Besides this, gold is one of the few assets that can withstand inflation. If you, for instance, held on to a piece of gold worth $150, 50 years ago, its value would be worth several times more than the initial amount. If you, however, held on to $150 in cash, its purchasing power would have decreased significantly.
The Gold Investment Options Today
Investors have several options to choose from when it comes to gold investments. Depending on their financial objectives, they can choose one or several options from the ones listed below:
- Gold Mutual Funds
- Gold Bullion – Best Invested Through a Gold IRA
- Mining Companies’ Stocks
- Gold ETFs
- Gold Futures
Each of the above-listed options has its unique benefits, but if you are an investor who is trying to protect your investment portfolio from the unstable economy, geopolitical crises, inflation, and the weakening U.S Dollar, then the best option for you is Gold Bullion (bars and coins). Gold coins have the added advantage of liquidity, which is something you should highly consider since emergencies can arise and demand that you raise as much money as you can within the shortest time possible.
If you are ready to invest in gold, then I highly recommend that you start by taking a look at what the companies below have to offer:
I hope that by reading this post that you now know whether investing in gold is smart. Do you have any questions about today’s topic? If you do, kindly drop them in the comments section, and I will get back to you ASAP.
I wish you well,
Eric, Investor and Team Member at Gold Retired.