Tuesday , 28 May 2024

7 Benefits Of Investing In Gold

An Introduction

Gold isn’t just a commodity. It is the most universally recognized and liquid medium of exchange on earth. Central banks around the world own over a billion ounces of gold to protect their currencies against recessions, inflation, and geopolitical turmoil.

An article by Vaulted,com that has been edited and abridged for the sake of clarity and brevity to provide the reader with a fast and easy read.

While there are many reasons you might personally own precious metals, here are the top 7 benefits of investing in gold:

  1. Gold ensures financial independence

Gold is the only major asset that holds its value independently of government decree and the banking system. When you own gold, the value of gold does not rely on the decisions of any particular authority. By reducing dependence on governments and banks, gold is the best way to guarantee individual autonomy over your financial life.

2. Gold improves risk-adjusted returns

While gold doesn’t pay dividends (like stocks) or interest (like bonds), it acts as a buffer against market downturns…Since the end of the gold standard in 1971, gold has outperformed the S&P 500.

GOLD VS. S&P 500 Benefits of investing in gold

3. Gold keeps your financial life private

…Gold is much more difficult to track and regulate than cryptocurrencies…[whose] transactions are recorded on the blockchain, a public, electronic ledger that keeps a permanent record of all transactions across a network of computers…Unlike digital currencies, gold transactions are not tracked and recorded on a public ledger.

4. Gold minimizes losses in a portfolio

Because physical gold has no counterparty risk, investors use it as a safe-haven asset and a store of value when other assets become riskier (especially during times of economic uncertainty and geopolitical turmoil). Portfolios with a gold allocation consistently perform better during times of volatility because individual investors, businesses, and governments tend to buy gold during times of crisis.

Gold has also served as a better buffer for stocks than the traditional bond allocation. The charts below show the performance of three different portfolios over three different time periods:

  1. 100% stocks (dividends reinvested)
  2. 67% stocks, 33% bonds (annual rebalancing)
  3. 67% stocks, 33% gold (annual rebalancing)

5. Gold preserves wealth

Fiat currencies are in a constant state of devaluation because they have no limit on supply. Printing money is always the politically expedient solution, even at the expense of long-term stability. The more money is created and pumped into the system, the more prices necessarily rise. Gold, on the other hand… safeguards your savings against the erosion of purchasing power caused by interest rate manipulation, government spending, and mounting debt. It moves independently of other assets like stocks and bonds, making it a valuable diversification tool for investors looking to spread risk in their portfolios.

6. Gold is a hedge against inflation

When the value of fiat currencies declines, gold retains its purchasing power…ensuring that you have the means to pay for necessities…regardless of currency devaluation. In effect, you can look at gold as an alternate way of saving your hard-earned dollars.

7. Gold offers liquidity

Gold is highly liquid, meaning it can be easily bought or sold…The most common ways to own gold are in physical bullion, coins, jewelry, or through gold-backed exchange-traded funds (ETFs).

How to start investing In gold

You can learn more about the best ways to invest in Vaulted’s guide, How to Invest in Gold: 7 Methods You Should Know About. One of the easiest ways to start investing in gold is to open an account through the …It takes just a few minutes to set up…[and once you have done so] you can connect your bank account with your Vaulted account. You will then be able to…get direct ownership of specific, serial-numbered bars [which Vaulted] will store…in its vaults in the Royal Canadian Mint or, if you wish, you can take delivery of your gold. If you ever want to sell your gold, you can also do so through the . Learn how it works and buy gold through Vaulted Now

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