Should gold be part of your portfolio?

Gold’s very name is enough to get people excited. The precious metal is respected in the entire world for its rich history and high value. It has been around longer than both cash and stocks. As world markets continue to fluctuate, many are wondering where to find safe investments. Here are 8 top reasons why gold investment is a great idea.

While cash is king, it is regularly affected by market changes. This makes people resort to buying precious metals in order to avoid financial collapse. When the dollar fluctuates and people buy gold in large quantities, its price skyrockets. The metal insures you against the acts of central banks, economic uncertainty, and civil unrest. It is among the only assets that can help you to preserve your wealth when all currencies are losing their value.

Gold Investment is a great way to preserve wealth from generation to generation. Gold is one of the few investments that maintain their value over the long term. Unlike cash and other assets, its value does not fluctuate.

Universal Recognition

Gold is universally acceptable. Every country in the world accepts gold as a form of money regardless of the currency used. You can store gold in another country for safekeeping without being concerned whether its value will fluctuate.

Psychological Appeal

Public perception affects the price of gold just as much as the laws of supply and demand. What this means is that its price is more likely to increase just because it is gold.

Cant Be Duplicated

Unlike paper money which can be printed at any time, gold is impossible to copy. It is a natural resource that comes in limited supply. When fiat money is printed in bulk, it loses its value. This is the main reason why the standard of living has risen dramatically over the years. Gold cannot be printed like paper currency; its value remains constant when fiat money depreciates.

Serves as Collateral

When you want to finance a home or a large asset, gold investment comes in handy. The financiers will have more confidence in you as you have collateral they can count on.

Protects Against Political and Geographical Instability

In times of political or geographical instability, gold retains its value. It remains constant even when other metals are fluctuating. People flock to the safety of gold when world tensions rise. At such times, it performs better than other investments. When confidence in governments decreases, gold’s price goes up. For example, during the Great Depression, when the economy was burdened by excessive debt, gold’s relative purchasing power soared while other prices dropped sharply.

Helps Maintain a Diversified Portfolio

Gold helps you to keep a diversified portfolio. It has a negative correlation to financial instruments like stocks. History shows that when gold is doing well, stocks aren’t. If you want to decrease the risk and overall volatility of your investments, it is important to have a diversified portfolio comprised of stocks, bonds, gold, and other assets.

Gold investment has many great benefits. The age-old precious metal maintains its value over the long term and protects you against inflation. It is arguably one of the best investments you’ll ever make.

Gerard is a passionate business blogger and works as a financial consultant for gold investors.