publication date: June 18, 2021
Investing in gold is one sure way to ensure your wealth stays secured. Therefore, we understand your interest in understanding this investment deal.
To invest in this precious metal, you may need a gold investment company to help you through the process. Usually, this company will provide opportunities through which you as an investor will be able to generate wealth through this asset diversification. A lot of investment companies are available these days and are offering several interesting packages.
Despite these companies being readily available to help in this investment deal, one major question is always at the back of everyone looking to diversify their asset in this way. “Is gold investment a good idea?”
What we will discuss in this article will provide you with enough knowledge to answer this big question. But first, how did investing in the “king of metal” become a thing? Let us take a brief detour into history.
The noble metals: silver and gold have for a very long time held a position in almost every civilization’s economy. These precious metals used to be a form of money in ancient times, however, supply was very limited and so the equilibrium of their value was always intact.
The fact that they were easier to move around than other items made them more convenient to be used as money. They were also used to make jewelry and other precious items.
It was not until the late 19th century that these precious metals stopped being the primary money form. The use of these precious metals for money was so absolute that Western economies’ first paper monies were simply receipts of these noble metals held in vaults.
The use of these metals as money in the United States stopped in the 1870s. It was alleged that the people who had direct access to silver that was not minted were already too much. Click here to find out how the silver standard affected China’s economy. This would have wreaked havoc on the system then so the use of silver as a standard had to be stopped in 1873.
With the evolution of monetary systems, gold as a standard could not be sustainable anymore. Therefore, the Bretton Woods system was introduced. With this system, a concept known as fixed exchange rates was introduced causing the gold’s value to remain fixed. This system worked for a while until it began to fail.
The United States left the system in 1917, and this ultimately made the system collapse. With the Bretton Woods system’s collapse, the United States dollars began to weaken. This led to gold’s value becoming unstable.
There are many ways to have and invest in gold. However, there are three broad types of investments…
This means owning gold in its physical form. This does not necessarily have to be held in the impressive bar form; you can have it as numismatic and rare coins, gold bullion, and so on.
In the past fifty years, several financial products have emerged that allow the electronic trading of gold. This method is a lot efficient and cheaper than trading in its physical form. Some of these products are CFD which means Contracts for Difference and EFT which means Exchange Traded Funds.
This involves investing in mining stocks. What this means is that if you choose to invest in this way, you will be buying shares or stocks in a gold-producing company. The stock prices are usually fixed, but the revenue increases and decreases with the value of the product.
Despite how you choose to invest in gold, there are a lot of benefits that you stand to gain. Some of them include…
Although having its physical form is also advisable and a smart move. You can hold this asset in several ways without holding on to its physical form. One way most people invest in this market is by mining shares. Hence, you get all the benefits attached to this precious metal’s price rise without having to worry about the stress of storing it.
Also, if you choose to have it in its physical form, you can alter its shape. Having this precious metal in bars may be very impressive, however, it may be quite awkward and heavy to store. Visit here https://www.cnbc.com/id/43975881 to find out how to store physical gold. So, you can also choose to have them as collectible coins.
Unlike paper currencies, common coins, and other assets, this noble metal has been known to maintain its values for centuries now. The fact that it has unique properties that makes it highly resistant to corrosion is one thing that boosts its appeal.
This asset has also gained a reputation for being able to hold a strong hedge against price rise that affects every other asset including paper currencies. In the past, during high inflation where stocks were plunged, the value of gold instead soared at this point.
These are retirement plans that are government-approved and have backings of physical gold. These plans are a lot more common these days since they offer great protection for retirement funds. How does this work?
As already stated, this asset has a great hedge against price rise, and the market like we know it can change at any time. Having a retirement plan that is gold-based will ensure that your retirement fund is not affected by the unstable nature of the market.
These precious metals are in high demand and will only keep getting more and more demanded. We can attribute this to markets like China and India where these noble metals are highly valued. As we all know, when the demand is high, so also is the value of the product.
Despite the political atmosphere of a country, this asset would still retain its value since it is a global asset. This gives those that have invested in it a solid guarantee that their wealth is secured regardless of whatever political crises are going on.
Investing in gold is one way to ensure your wealth stays secure. However, as with anything finance-related, it is normal to have doubts. Nevertheless, we believe the benefits listed in this article have been able to clear your doubts.