Gold is often regarded as one of the most precious metals on earth. With the ongoing pandemic proving the uncertainty of many investments, it’s not surprising that the global demand for gold has surged. There are many advantages to investing in gold compared to stocks or bonds, and this article will go through a few of those reasons.
Gold is Highly Regarded
Gold has been prized throughout the ages, resulting in economic, religious, and social significance, and for centuries, it has been highly valued and sought after in many cultures. Gold has been seen in funeral rituals in Egypt, in temples, ornaments or gifts of jewellery in Asia, and even for medicinal purposes in Europe and today, gold remains in regular use in these countries, proving that it can stand the test of time in value and popularity.
The Benefits of Physical Gold
Investing in allocated (physical) gold is a safe choice in the current economic climate. Stocks and shares are known to crash without warning suddenly, and paper money naturally loses value over time, whereas physical gold is an inflation-proof investment. Moreover, gold is an effective long term investment, with its value increasing by 655% over the last 20 years, presenting a considerable return for investors over time.
As mentioned above, gold has always been in high global demand. Therefore, you will always have an opportunity to sell your physical gold if you need to. Another advantage to investing in physical gold is the security you gain instead of online investments. As we become increasingly digital in all aspects of life, the benefits of tangible assets, in turn, become more appealing.
Furthermore, physical gold is safe from online hackers and identity thieves. Therefore, if at any moment you find yourself without internet or in a compromised online position, the possession of physical gold really could be a lifesaver.
The Benefits of Unallocated Gold
The most common form of gold investment is unallocated gold. About 95% of the world’s gold ownership is in unallocated gold. This means that you do not physically own the gold, but it is backed by a bank’s physical gold reserve, and as it has no storage costs, it is often cheaper than physical gold. In addition, a considerable benefit of unallocated gold, compared to other commodities, is that it has much lower volatility, and with demand remaining reasonably constant, interest rates are likely to stay low.
Gold exchange-traded funds (ETFs) are also a cost-effective way of investing in gold stocks, allowing investors diversified exposure to gold without having to invest huge sums of money.
Whether you choose to invest in allocated, physical bullion or coinage, or unallocated gold, it is easy to see the benefits of doing so. Whilst the price of gold can be volatile in the short term, it has proven to hold its value in the long term and remains an invaluable long-run inflation hedge that provides a strong foundation for any risk-intolerant portfolio.