Friday, May 24, 2024

Special Benefits of Investing in Gold

Today, gold is respected for its rich history and value that are interwoven into different cultures for centuries. Gold coins were first used around 650 BC, while pure gold came during the era of King Croesus of Lydia

Since then, people have held gold for varying purposes, especially as a store of value. When other currencies fail, gold is usually the fall-back metal. It is not just the central banks that are resorting to gold; individual persons are also buying gold bullions, ETFs, and futures

So, what are the benefits that come with investing in gold? In this post, we will tell you the five main reasons why a lot of persons are also investing in gold. 

Gold is a Good Hedge against Volatility 

Gold is considered an excellent investment, especially during turbulent economic times. Because of its rarity, its price, and multiple applications, the supply will always be scarce and demand high. 

On the market, the price of gold is inversely proportional to other trade instruments in the commodities market. So, when the global economy is facing high volatility, maybe because of a global pandemic such as COVID-19, new trade policies, or speculation, gold can be an excellent “safe haven” to ride out. 

Offers an Independent form of Investment 

Gold provides an awesome independent investment opportunity. When you buy and store gold, especially when correctly allocated, it belongs entirely to you. This also implies that you can store the gold and its value therein, free from the banking system and conventional economy. So, your investment cannot be frozen through court orders or lost because a bank has been declared insolvent. 

There are Many Ways of Investing in Gold 

When thinking of an investment opportunity, gold stands out from the pack because it can be traded in a number of ways. For example, you might want to buy actual gold bullion to get the feel, touch, and sophistication that it brings. For those who do not want to keep the bullions back at home or incur the additional costs associated with storage, other top investment options include: 

  • Trading gold ETFs. 
  • Buying and selling shares of companies that deal with gold. 
  • Trading gold futures. 

Indeed, you can even diversify by investing in gold bullions and still trading gold futures. To make your investment strategy more effective, consider combining investment in gold with other trading instruments, such as stocks and bonds.

Dwindling Supplies are Likely to Boost the Price of Gold

A closer look at the supplies of gold, especially in the 90s, reveals that it came from the sale of bullions stored in central banks. However, this trend slowed down in 2008, and the production from existing mines has also been going down since 2008. For example, gold mining output shot down from 2,573 metric tons to 2,444 metric tons between the years 2000 and 2007. Although the production rebound in 2011, the sharp fall of 2000-2007 resulted in a sharp rise in demand, which is expected to continue in the coming years. This indicates that the price of gold is also likely to take an uptrend in the coming years, and it will be a great idea to cash in when the demand soars. 

While there are many benefits of investing in gold, as we have highlighted in this post, it also comes with its own share of cons. The most notable is the additional costs, especially for traders who want to focus on gold bars and bullions. For example, you will need to use additional funds to put up storage units, transport costs, and insurance-related charges. 

This post has demonstrated that investing in gold comes with huge benefits, and it might be a great consideration for you. Remember to start by understanding the investment well and how it works. For example, you need to work with the best dealers, such as GoldAvenue and were to sell it when the price moves up. 

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