The Benefits of Buying Gold as an Investment

The Benefits of Buying Gold as an Investment

If diamonds are a girl’s best friend, then an investor’s just might be gold.

Precious metals are some of the most ancient forms of investment around—and some of the most reliable. With a global economy more prone to a domino-style effect than ever, smart investments in gold could shore up your portfolio. But what makes gold such a good choice?

Here are some of the key benefits of buying gold as an investment.

Hedging

Any smart investor knows to hedge. Hedging is how you “insure” your investments so that you can offset the impact of an investment mishap.

Gold’s long-term place as one of THE investment opportunities makes it excellent for hedging. You can take out said “insurance” in gold and take risks with other investments, knowing that gold has your back.

Long-term Stability

That brings us to gold’s longevity, which is impressive.

Gold might be the world’s oldest investment—it’s certainly the most popular over time. From ancient history to the modern-day, gold has held its appeal. Any investor worth their salt knows that investing is a long-term game, so investing in gold is a no-brainer.

Gold is Currency

You may be familiar with the history of the “gold standard”, which is the history of gold as a backing for currency.

While it’s true governments have moved away from the gold standard, gold’s importance hasn’t changed. In fact, gold’s value still reflects trends in the value of various currencies. Gold effectively remains a currency even though it’s no longer the literal standard at which other currencies are set.

When you invest in gold, you’re investing directly in the world’s economy—which means the value of that investment remains strong over time.

Disaster-Proofing

Well, if 2020 taught us anything, it’s that nothing in the world is safe from a determined global event.

That’s a shock to the people living in stable, developed countries, who have enjoyed relative sanity for decades while disasters happen elsewhere. It’s a great reminder that reliable investments can insulate you against these culture-defining shocks, so your portfolio can keep growing even in the darkest times.

Gold is largely disaster-proof, and could steer your portfolio through the likes of pandemics, wars, and other global events.

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Diversification

The final reason is also one of the simplest: diversification makes a healthy portfolio. Or, as common wisdom would have it, “don’t put all your eggs in one basket.”

Investing in precious metals offers more than just an option for hedging, it also diversifies your portfolio. That insulates you further against a financial shock and guarantees that you won’t be wiped out if your other investments don’t pay off.

Buying Gold as a Smart Investment

As you can tell, there are still plenty of reasons to buy gold in the current year. If anything, the seismic shock of COVID-19 shows us that gold is here to stay as a way of giving investors security in tumultuous times.

Looking for more financial wizardry? Check our Finance section often for more.

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