From ancient times up to today’s digital age of cryptocurrencies, gold continues to be deemed as a valuable investment. People from all over the world know the power of this particular asset. If you have the financial resources, you should definitely invest in gold and be assured that you’ll get high returns in the future.
Here are the reasons why you should diversify your portfolio and include gold in it:
1. Strong Value Retention
One of the best reasons to find ways to buy gold in 2020 is because of its substantial value that has proven to withstand the test of time. As mentioned above, gold has long been known for its high price. Countries have fought over it, and it’s frequently given as a gift from one king to another.
Nowadays, gold remains to be an excellent medium to pass wealth from one generation to the next. This is because, unlike paper currency and other items, it doesn’t corrode nor decay. Plus, its malleability is also a favorable factor since you can quickly melt gold and mold it into any form you like for a touch of personalization.
2. Protection Against Inflation And Deflation
Gold is also a great asset if you’re looking to beat inflation or the continuous rise in living costs. Typically, you buy gold using fiat currency, which makes it a commodity. It, then, becomes inversely correlated with the dollar or any other currency. With this, its value rises when the cost of real-world money goes down, giving it excellent protection against inflation.
Moreover, gold can also be a safeguard against deflation. When the price of goods and services falls, consumers and their money have more purchasing power. You might think that gold’s value will plummet when this happens because of its inverse correlation with fiat currency value. Nonetheless, gold is a special kind of commodity that can also hold cash, which makes it valuable even during times of financial recessions.
3. High Demand, Limited Supply
Like any other commodity, gold’s value depends on its demand and supply. If you’re planning on building your retirement nest egg, you should diversify your portfolio and include gold while you can still easily purchase the asset.
Jewelry production is the primary reason for gold’s high demand. A lot of couples give gold trinkets and baubles to each other as a sign of how much they love one another. Its high value makes it an ideal gift for your significant other.
The other industry that significantly contributes to gold’s high demand is from direct physical investment. This includes bullions, coins, medals, and bars. Other surprising fields that increase the need for gold are dentistry, heat shields, and tech gadgets, which utilize the metal for their components.
In terms of supply, nature has a relatively plentiful supply of gold. For instance, you can extract the metal from seawater. However, you’d need tons of seawater to produce gold, which would make the extraction process more expensive than the amount that would turn out.
Aside from extraction, mining gold has become expensive as well because miners have to dig deeper to find the metal since the ones on the surface have already been excavated. This is why gold remains to have a hefty price tag.
4. Looming Financial Crisis
This reason is associated with gold being a safety net against inflation and deflation. The current pandemic has affected the world’s health, as well as the global economy, which may lead to financial devastation for most of the population. You can protect yourself from these types of crises by investing some of your wealth in gold.
5. Safe Haven Asset
A lot of investors think of gold as a safe haven asset because it’s highly likely that the world would fall back on using it for trade when paper money suddenly loses its purchasing power. Gold has also earned the moniker “crisis commodity” since its value surges when there’s financial instability due to geopolitical tensions and turmoil.
Gold has always been considered as a valuable item. From jewelry to gold bars, getting a hold of this metal can help secure your financial future. One primary reason is that gold retains its value even during uncertain economic times, which is why it’s protected from inflation or deflation.
Secondly, gold’s limited supply can’t cater to its high demand, so you can be sure that your investment will get significant returns. It’s also deemed as a safe haven asset, which can help you wade through financial crises that may arise in the future.