Gold is the investment that refuses to die. The precious metal has performed well in the wake of most financial crises and continues to be an asset worth holding on to in times of uncertainty. But is it really a good investment?
We take a look at gold as an investment and how it’s done over time; even though gold still may not be the best way to protect your finances, some experts say that gold can still serve as an important diversifier in your portfolio.
Especially when you have the help of companies like Oxford Gold Group or Acre Gold to help you with your investment.
To learn more about these companies, see this Oxford Gold Group review. And we will drop a link to Acre Gold below.
How has gold performed over time?
Gold can be a volatile investment, but there are times when it’s been a good performer and times when it hasn’t. From the year 2000 through 2010, gold returned an average annual return of negative 4.4%. But from the end of 2010 to today, the value of gold shot up; it has led to a more than 7.9% average annual return from that time period.
When gold’s value rises, it’s usually in an upward trend that can be felt nationwide. That being said, gold has been a forecaster of economic turmoil and typically comes to the forefront when there are financial hardships. In 2005, gold prices rose when the U.S. suffered through several months of poor economic data like high unemployment, which was seen as a sign of the weakening economy.
Going back to the companies, see the Acre Gold review here.
Is it a safe investment?
The biggest risk with owning gold is that it can be hard to predict how the value of the metal will change day to day. Gold prices are highly sensitive to politics, policy changes and global central bank actions, which makes it difficult to accurately gauge the spot price. In addition, a lot of gold investors take positions in currencies or other assets and not just gold – these activities can increase market volatility.
Gold’s returns tend to be low when compared to stocks or bonds. That may be because gold is held in the hands of investors while other investments are held by financial intermediaries. The volatility of a gold investment can increase as it’s moved around, so you’re better off holding gold in a safe deposit box at a bank.
So, is gold a good investment?
The returns of an investment are important, but you should also consider its risks when weighing all of your options. That being said, gold can be a good way to hedge against other assets that may not perform well in an economic downturn. Investing in gold also means investing in tangible wealth that can be passed down for generations to come. Get more resources here: https://www.mercurynews.com/2022/05/28/gold-ira-guide/
Here are other reasons why investing in gold can be a good idea:
1. High liquidity
Gold is highly liquid; this means that you can sell it very easily without having to worry about paying a hefty commission or getting less than you expected for your gold.
2. Low volatility
Gold does not have the same volatility as stocks or bonds. Because of this, gold is often an asset diversifier when making an investment portfolio – it can offset investments that are more volatile and help smooth out your portfolio’s performance. However, it’s important to weigh the pros and cons with other investments in terms of risk-reward ratios before investing in them to make sure your investment portfolio is balanced.
3. Historically stable
While gold prices may fluctuate, they are still historically stable compared to other investment opportunities.
4. Protection against financial turmoil
Gold tends to perform well in time of financial turmoil, like during the Great Recession. During these times, investors may sell off stocks and other investment vehicles that aren’t performing well; during this time, gold prices may rise as demand increases.
5. Good inflation hedge
Gold has historically been a good hedge against inflation. Historically, gold prices have increased whenever there was significant inflation because more money is needed to buy goods and services when there is higher inflation.
6. Insurable
If you own gold, you can insure the metal so that if it’s stolen or damaged, you’ll get compensated for your loss. Even if you don’t have any sentimental attachment to the gold, it’s beneficial to have a policy that will ensure you’re getting paid for your loss – especially if you’re using your investment as an emergency fund.
7. Safety in times of crisis
If you’re concerned about a financial crisis like we’ve seen in the past few years, gold may be an asset that is worth considering. Because of its ability to hold its value over long periods of time, it can be a good way to prevent your savings from losing value during these times.
If you’re looking for a good investment, consider gold as long as you think you can afford to keep your money in gold for the long-term. When you consider your investment goals, it’s smart to diversify your assets by having several asset classes in your portfolio.