Gold as Investment

Posted On : 23-07-2019

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Gold is easily one of the most popular and precious metals. Its capability of being an investment factor is one of the main reasons. The main reason for the consideration of gold as investment is because it has the most effective safe haven and also for it’s hedging properties across numerous countries.

Gold is now a very valuable asset. Central Banks and other financial organizations like the International Monetary Fund (IMF) are said to be holding at least one-fifth of the above-ground gold in the entire world. Many central banks have started adding gold reserves as a precaution for security for the long-term global economy.

Brief History of Gold

To understand the purpose and value of gold, you must first know about the history of the gold market. Though gold was used for jewelry a long time ago, it wasn’t until 560 B.C. that it started acting as a currency. As jewelry was well-known in every corner of the earth, the creation of stamped sealed gold coin was accepted. It simplified trade as it was a much easier form of transfer of money.

Preserving Wealth

The importance of gold in the modern economy revolves around the fact that it preserves wealth through generations. However, paper currencies cannot be compared to gold in this comparison. The value of gold will never diminish with time but the value of paper-denominated currencies will erode due to inflation.

A Safe Haven?

Why is gold considered a safe haven? Well, gold is looked out for every time when there is a political or economic turmoil. At difficult times when the world faced a major collapse of currencies, investors who possessed gold were always able to protect their fort of wealth. Any economic uncertainty will trigger the investors to purchase gold as a safe haven. 

Constant Income? Is Gold a Dividend-Paying Asset?

It is the growth investors who are very interested in gold stocks as their stock prices rise and fall according to the price of gold. But there are a few properly managed mining companies that generate profit even if the gold price diminishes. So, even the income investors can eye the gold stocks. Sometimes the gold stock owners earn higher revenue than the actual owners of physical gold if there is even the slightest increase in the price of the gold. 

Gold as Investment

The most suitable time to invest in gold is when the value of your national currency is set to diminish. Economical & political turmoil or a massive decline in the stock market also reduces the value of the currency. An increase in the demand for jewelry will also benefit you if you plan on investing in gold at that specific period of time. You could either play the role of an ordinary gold investor by purchasing gold beforehand and holding it instead of waiting for the right time.

Investing in Gold

There are numerous ways to invest in Gold if you wish to:-

1. To directly purchase gold: You can purchase gold and hold onto it to sell it at a later date. Although it will incur additional expenses for its insurance and storage, it could be totally worth it.
2. Buy shares in a gold company: However, you can also buy stocks of gold mining companies. In this way, you will also receive dividends.
3. Invest through Gold ETF: If you wish to invest in various ranges of gold securities, investing in Gold ETF would make perfect sense. A gold ETF is an exchange-traded fund that specializes in investing in various ranges of gold securities which minimizes risk due to its diversified investment strategy.

In the modern era, paper currency is without a doubt the choice of wealth. But Gold as investment is a profitable investment. The value of your currency could decrease due to inflation or devaluation of the country’s currency. It is at times like these you will understand the importance of why gold as investment. With that being said, what you must now understand is that simply buying gold will also not help you. You must be aware of the cost it will take you to insure and store the gold securities. It is also much better if you find out the difference in investing between Gold ETF and Gold Mining ETF. If you are eyeing for a profit, then these are a must to know.

 

 

 

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