Investments in gold have been the Gold standard for decades and remain so. However, should you invest in gold as an asset? Gold has earned its fair share of respect across the globe due to its rich history and value.
People tend to buy gold for a variety of reasons, and this keeps the metal always on the trading radar. If you are considering diversifying your portfolio or investing in gold for the first time, the following are some of the prominent reasons for the same.
- No Bankruptcy:
Anyone who holds gold does not need any other party or middleman to fulfill any obligations. It is the only asset that isn’t some other entity’s liability. This also happens to be one of the biggest advantages of owning gold. If any bubbles pop or there is a crisis, you can always rely on gold to keep your portfolio healthy. In its approximately 3000-year-old history, the value of gold has never gone to zero. Thus, you can always sell gold, in exchange for currency.
- Tangible Asset:
It is one of the few assets that is tangible and thus, gives a sense of safety to a lot of investors. Also, it is much easier to buy gold than other assets which are tangible, such as real estate. The fact that no one can hack your gold and misuse it, is an added advantage. However, storing gold is a security concern that you must not overlook.
- No Skills Required:
When it comes to stocks, you need either fundamental or technical analysis to buy them. If you wish to buy a diamond, you need to be sure about its authenticity of it. Similarly, you need to be able to spot between original paintings and counterfeits. Yet, none of that applies to gold. You simply need to have the money to buy gold and store it. You do not need any special skills for the same.
- Hedge Against Inflation:
One of the major reasons for investing in gold is to use it as a hedge against inflation. In the long run, it serves as a hedge against inflation. As inflation rates rise, the currency values go down. History shows us that currencies have depreciated much more than the value of gold. On the other hand, the value of gold has doubled in the past few years and almost quadrupled in the past decade. Also, the average return of gold over the past decade has far outshined the inflation rate of the same duration.
- High Liquidity:
Another strong reason for investment in gold is its high liquidity. You can sell gold as easily as you can buy it. You can walk into any jewelry shop and they can buy the gold from you. There are various other avenues where you can sell gold as well, such as pawnshops, online dealers, local coin shops, and so on.
If you are on the edge about whether to buy gold or not, the above reasons should help you decide better.
