Preserving and building your assets should be a part of anyone’s game plan to secure a more stable future. After all, the last thing you want to happen is to let time pass you by with no financial security to fall back on.
While some people decide to put their money in the bank, there are those who opt for something more profitable over time. By investing in gold, you can grow your wealth through the weakness of fiat currencies and eventually pass your investments to your children and grandchildren.
In fact, a huge number of investors have been purchasing gold in massive quantities, and they have no regrets doing so. With the increasing price of gold, you can expect to get outstanding returns on your investment over the long term. Hence, it is one of the wisest things you can do when aiming for wealth preservation and asset building for your retirement.
Reasons for Investing in Gold
The following are among the reasons why it makes sense to invest in gold:
1. Paper Currencies Fail
Throughout history we have witness currencies rise and fall. Sadly, the currency failure in Greece resulted in a significant economic turmoil which has impacting other European nations. This goes to say that we can never be too sure how long the dollar can remain as a strong currency since paper currencies are bound to fail at one point or another.
If you think about it, why else would China remain interested in purchasing gold? Well, one reason is that they want to prepare in case the US dollar is devalued. Additionally, there is an increasing supply of money as paper currencies are continuously being printed, yet this causes the inflation of money. With the increasing rate of inflation and influx in money supply, currencies are bound to fail.
2. Central Banks are Buying Gold
With the constant manipulation of the money supply, it is not surprising that economic depression and global recessions occurs. Thus, the rest of the world suffers the implication of a single department manipulating the money supply.
With an attempt to secure financial security, central banks worldwide have been investing into gold because they understand the on-going economic crisis. As this issue persists, and once it ends, the losing country’s economy is at stake.
3. The Value of Gold Increases
Based on the World Gold Council’s report about 153,000 tons of physical gold was mined throughout human history. Presently, there is a shortage in gold reserves, and it is expected that it will only be about 10 to 15 years from now until the very last gold mine can be processed.
Considering the limit in the supply of gold, the price of this precious metal is bound to rise. With this in mind, we would not be surprised if the prices of gold will continue to increase, and this is good news since skyrocketing demands result in massive returns on your investment.
Moreover, economists have stated that there is a correlation that exists between the price of gold and oil. Since oil prices never seem to cease, the same holds true with the cost of gold. Now, this is great news for those who have invested in this precious metal.
4. Billionaires are Buying Gold
Most billionaires are focused on growing their wealth, and it’s no surprise that they are choosing gold as one of their investments. These brilliant investors aim to protect themselves against the future and prepare themselves for retirement.
What sets them apart is their expert understanding of diversification by a adding a mix of financial instruments such as stocks and bonds. They understand that by adding gold to their portfolio, they can have some kind of insurance or protection in case their other investment vehicles fail.
Benefits of Owning Gold
Considering these reasons why people are investing in gold, you may want to look into some of the benefits that you can expect from this precious metal.
1. Preserve Wealth
At present, the US dollar may be among the most valuable reserve currencies in the world. However, its value is not immune from falling, as evident in what happened from 1998 to 2008.
On the other hand, gold’s value massively increased during those years, and it went as high as $1,000 per ounce in the early parts of 2008. From 2008 to 2012 gold continued to soar, with the value going to a whopping $1,900 an ounce. In tough times gold has proven to secure and preserve wealth in case paper currencies fail.
In India gold is regarded as an important metal for producing jewelry, while in China gold bars serve as a traditional means of saving. In fact, gold is as good as cash because of its high liquidity. Thus, when you need some funds, you can always rely on gold as it serves as your ticket to freedom from financial difficulties.
It helps to diversify your portfolio as a means of lowering the volatility of your assets in case difficulties arise. It’s impossible to expect all financial instruments to remain constant in terms of value or return on your investment. By combining gold with bonds and stocks in your portfolio, you can minimize the risks and volatility at the same time.
It has been proven throughout time that gold has performed rather well as a hedge against increasing inflation rates. The price of gold has constantly increased along with the cost of living.
Ever since the Second World War, inflation in the US has been at its peak, while the average real return based on the Dow Jones Industrial Average was at -12.33%, while it is 130.4% for gold. Obviously, you are well-protected with gold even when inflation hits the economy.
After learning more about why invest in gold, it is only essential that you consider this instrument as a part of your investment portfolio. While the price of gold may be volatile, it’s in the short term and the value remains notable in the long term. It is the only investment that can protect you once major currencies fail, plus it is a significant tool as a means of hedging against inflation.
I’ve been a financial retirement planner for over 30 years and have been investing in gold, silver and other alternative investments since 2008. When I’m not spending time with my wife and 3 beautiful children, I am learning more about new emerging technologies such as the blockchain.