Gold is often seen as a luxury instead of as an investment. However, gold is actually one of the best forms of investments to make.
What is gold?
Historically, gold has been seen as a valuable commodity. Owning gold can act as a hedge against inflation, a good portfolio diversifier, and a financial cover during trying times.
Why invest in gold?
- Safe Haven - Gold acts as a safety net against drastic dips caused by unforeseen circumstances or events which can cause traditional asset classes to decline.
- Portfolio Diversification - Do not put all your eggs in 1 basket. Spread out your investments for a more robust and less volatile portfolio.
- Inflation Hedge - The price of gold is viewed as more stable over time as it is less dependent on business cycles as compared to other goods and services.
- Low or negative real interest rates - Returns on bonds and equities compensates less for risk and inflation. Why no turn to gold as an alternative investment?
- Tradable Commodity - Investors are able to take advantage of gold price fluctuations.
What affects Gold price?
As these factors increase, so will the price of gold.
- Demand.
- Inflation.
- World Instability
As these factors increase, the price of gold decreases.
- Supply
- USD
- Interest Rate
- Alternative Investment
In the event the factors above decrease, the effects the the price of gold will be vice versa.
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