Most new and inexperienced investors rush to fill their portfolios with real estate, stocks, and bonds. Only the savvy and experienced ones care about precious metals like gold. All serious investors have gold in their portfolios. This historical currency is considered a necessary hedge that protects assets under certain circumstances. If your investment portfolio lacks gold, you need to remedy the situation at some point in the near future. Check out below about why you need to spend time and money buying gold:
The Future of the Economy is Highly Uncertain
As mentioned above, the main value of gold in an investment portfolio is to act as a hedge. But a hedge against what? If you know your economic history, you know the markets have a tendency to periodically rise and fall. Some of these “falls” tend to be quite enduring and devastating, as it was the case during the Great Depression and the 2008 financial crisis. It is very naïve to believe that a similar recession might not happen in the future. It is, in fact, a certainty that some time in the future, economic turmoil would wreak havoc once more. When that scenario happens, you need to make sure your wealth is protected.
Cash assets lose value when the dollar is devalued, as it happens during a recession. On the other hand, the price of precious metals like gold shoots up. Investors use this mathematical advantage to hedge cash assets against devaluation in times of financial crisis or uncertainty. This is the main reason why all investment portfolios should have gold assets.
You Never Know When Cash Assets Could Lose Value
Do not rely on the certainty of cash assets one day bearing fruit. For example, long-term investments like retirement plans could become worthless if you only have cash assets and the economy takes a turn for the worse at least once in the decades leading up to your retirement. But if gold is there, cash assets will be protected. If you are going to purchase physical gold then it should be with a reputable firm such as Lear Capital. Once you’ve made the decision to buy physical gold you should hold onto it until it’s time to retire. Gold stocks are just like regular stocks and will not protect your cash assets. Actual, real, physical gold is a different animal and as stated can be a great hedge.
Diversification is Key to Success
Diversification of portfolios, in general, is considered the key to success. As the saying goes, don’t put all your eggs in one basket. Diversifying into areas like gold will make your overall portfolio stronger. It will be more resilient to economic shocks, stock market fluctuations, and political uncertainty.
Gold is a Timeless Trading Currency
There’s one other invaluable aspect of gold: trading. Even with the advent of paper cash bills, gold has never lost its lustre or necessity as a currency for trade. You can trade many things, like ammo, survival kits, and bicycles in return for gold in certain circles. Therefore, gold is always a useful asset to have in case you need to trade, after cash assets have run out.
As you can see, gold can offer budding investors many advantages. Therefore, it is completely worthwhile to take steps to own physical gold, no matter your age or career.