Why should I own gold?
There are many reasons to own gold and here we list a handful of them.
1. As a safe heaven asset in turbulent times.
2. To diversify your portfolio.
3. As a currency hedge
4. To store value over time
5. As a hedge against rising inflation
Gold as a safe heaven asset
With the light on the European economy, it’s not hard to understand that many persons and investors turn to gold. Gold has been referred to as a ‘crisis commodity’ and it’s no secret that it tend to outperform other asset groups during turbulent markets and periods with political unrest. When everything else falls, gold has historically risen. When governments print money and the local currency fall in value, gold keep on rising.
Gold to diversify your portfolio
Every investor, young or old, should seriously consider to invest in gold. It’s an asset that’s negatively correlated to the bond and stock market. Even though gold prices can be volatile in the short-term, it has proven to maintain its value time over time.
Gold as a currency hedge
Gold is primary bought in Dollars (USD), so when dollar decline against other currencies, gold has to rise. The growing national debt of many European countries have made gold even more interesting for investors around the world. A collapse of the stock market would likely give quickly increasing demand for gold.
To store value
Gold is used to for accumulation, while most other commodities are used for consumption. While other commodities might corrode and can have a limited life span – gold does not tarnish, perish or corrode.
Growing demand from Asian countries, such as China and India, have made the price of gold to go up numerous times.
As a hedge against rising inflation
Gold is a monetary precious metal, whose price is determined by inflation. When US Dollar or US stocks decline, when interest rates are volatile and when there is political unrest – gold usually react be going up in value.
In the curreny economic climate, it’s likely according to many economic experts, that inflation begin to rise quickly. Why is that? Well, the current monetary policies in many countries, spike in oil prices, growing trade deficit from several important nations and growing dept in USA are some of the reasons to worry for increasing inflation.
However, if you own gold it’s likely to protect your total portfolio value to some extent.
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