Investments are a way of preserving the value in the wealth that you create; while also growing it over time. Gold investments are very popular for preserving wealth, but can as well be used for growing your wealth through its appreciation over time. Although very popular since time immemorial, gold has never been easy to invest in and trade by common men due to its scarcity. However, thanks to companies like BitGold that allow you to buy gold online now you can access gold easily just like the high net worth individuals.
As a rare and precious metal, most people would love to own gold at some point in their lives. Investors however go beyond the aesthetic value in the precious metal and use it to preserve their wealth in times of inflation. When commodity prices are rising within the economy, currencies always loose their value, which results to lose of wealth for the investors due to depreciation in their money. To protect themselves from such loses as a result of fluctuations in commodity prices; investors buy gold in times of rising inflation to maintain their wealth at the same value during the turbulent economic times.
Gold has also been used as a safe haven by investors during uncertain economic times. Geopolitics across the globe usually have a direct effect to international trade and in the past these have resulted to economic clashes. During such times, businesses and investors lose a lot of money as markets come tumbling down. Investors therefore chose to run to gold when they detect negative geopolitical developments either in their home countries or in other regions which might have negative effects back home. In essence, they are usually looking for a way to store the value they have created by growing their wealth over time, so that even after the uncertainty in the markets, they will still be valued the same as before the market disruption. Gold has traditionally been the most secure asset in such times; which gives you more reasons to invest in it to help you make wise decisions when uncertainties strike.
Besides investing in gold to avoid the value of your wealth being eroded during seasons of rising inflation and economic uncertainty; gold should also be included in your investment portfolio for diversification purposes. Under the theory of investment portfolio management, investors are advised to have different portions of their investments in different asset classes. You can choose to invest partly in equity, fixed income instruments, real estate, derivatives or commodities. Among the most common commodities that veteran investors prefer for diversification of their portfolios is gold. It is advised that in order to have a well balanced portfolio that stands the shock waves in times of economic turmoil; you should have between 5% - 15% of your portfolio being invested in gold. This is for the very reason that the value of gold does not get affected so much by the fluctuations in the market; and in the end it always maintains a relatively upward trend.
Investing in gold bullions and bars has become very popular nowadays with many millennials wanting to have a slice of what was a preserve for the well to do in the society a few years ago. Those who cannot buy the gold bullions and bars prefer to use other indirect ways to own a share of the gold industry globally. Some prefer buying shares in gold mining companies while others opt to invest in gold exchange traded funds. Others buy unit trusts in companies that buy gold bullions and therefore they essentially end up owning a portion of the total gold owned by the gold bullion buying company.
However, the most fulfilling approach has been when the investors actually own the gold bullions themselves and they can be able to trade them as and when they would wish to. That is being made very easy and possible today with companies creating online platforms where investors can open an account and immediately start buying and selling gold online. This gives the investors both the satisfaction of actually owning gold and knowing at any given time how much gold they own; as well as the ability to transact using the gold they have in their accounts.
The investors do not have to worry about the actual storage of the gold since it is stored safely by the company providing the online trading platform and they can redeem it at any given point when they want to. They can as well transfer the gold to other people’s accounts or receive gold bullions from other people too. This flexibility being introduced by technology in gold trading is growing very fast; and might as well be taking us back to days when gold was a common currency in use across most parts of the world.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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