Gold is a durable default currency store and can be a safer haven for you to invest in compared to other traditional investments and securities like bonds and stocks. Aside from being a status symbol and an easy way to transfer generational wealth to your next of kin, gold is an investment that can maintain its value even during a financial crisis or when your other investment options, like cryptocurrencies, are not doing well. It makes for an excellent long-term investment that can bring you stable profits and can represent your wealth throughout your lifetime.
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Gold Maintains Its Value
Gold is and has a consistent historical record of being a valuable material and asset for growing and maintaining wealth. Acquiring gold is also not such a complex process, and with quality dealers like Oxford Gold Group, you can quickly add gold to your investment portfolio.
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Provides a Hedge Against Inflation
You can shield your wealth from inflation with gold because gold prices have a steady rise, having increased at an average rate of 10% from 1971 to 2021, and kept up with inflation rates over time, making it a compelling crisis commodity for your investment plan. Gold prices also rise during a recession, and its value may stay the same or even go up when the value of the US dollar goes down. Gold has an impressive resilience that can cushion your investments during a financial emergency, like when the price of the S&P fell by 38% in 2008, and gold’s value increased by over 25% as investors adopted it as a superior investment option.
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Helps Balance and Diversify Your Portfolio
Many financial advisors recommend maintaining about 8% of your investment portfolio in gold because its price often moves independently from stocks and bonds and can smooth out the volatility of your portfolio when held alongside your other assets. Having assets that are not closely correlated in your portfolio can reduce your investment risk. For example, with gold, you can achieve a less volatile investment portfolio because gold is minimally impacted by the macro-economic and micro-economic factors that affect most other asset classes.
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Gold Has High Liquidity
Another benefit of owning gold is that it is easy to sell, and there are many places where you can convert your gold to fiat currency very quickly as opposed to other investment options like stocks, where it can take up to three business days for the money to be transferred to your account.
You can quickly convert your gold to cash with your local dealer, a coin shop, pawn shops, or online dealers when you need emergency money and get your funds faster than when liquidating assets like property. You can carry out gold trades almost anywhere in the world and always find ready buyers to give you cash on the spot because it is a globally recognized asset, and even as jewelry, it doesn’t take long to sell, like artwork and collectibles.
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Gold Has No Counterparty Risk and Requires No Middlemen
For example, with bonds and stocks, the company may go bankrupt during an economic crisis, blowing your investments; however, gold maintains its intrinsic physical metal value and protects your assets from being another party’s liability. You can get the benefit of greater liquidity with other gold investment vehicles like ETFs, mining stocks, and certificates if you have the tolerance for counterparty risk; however, physical gold offers the best counterparty risk protection and leaves your assets from the financial health and stability of institutions.
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Gold Fees Are Minimal, and You Can Enjoy Tax Advantages
Gold is a straightforward type of investment where you can even store your gold at home or somewhere private if you are not up for the fees institutions charge to store your gold safely for you. Depending on your region and the purity of your gold, your investment may even be exempted from Value Added Tax like in the UK, where gold coins 22 carats or higher are VAT free.
Buying gold won’t cost you much more than its actual value because, unlike other investment options like brokerage accounts that have costly charges and fees, gold has lower maintenance costs as an investment. Other than fees to cover professional storage for your gold, which is recommended, you are likely to pay very few other fees when investing in gold.
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Investing In Gold Is Easy
One of the benefits of investing in gold is that you won’t require special skills, training, and equipment to invest in it. Unlike cryptocurrencies, real estate, and other investments where you may need to study and compare charts or even require trading bots, all you need to do with gold is buy and store it. Other than in physical form, you can hold your gold investment in various forms, which can include:
- Gold futures where you can invest on a speculation that the price of gold will rise or fall and make money if the price moves in the direction you think.
- Gold miner ETFs that let you bid on a collection of the biggest gold miners in the market, lowering the risk of investing in one company that can damage your portfolio if it underperforms.
In physical form, you have the option to buy your gold as jewelry, coins, or gold bars.
Endnote
If you want other highly liquid investments where you can quickly convert your position to cash when you need to, you can vary your gold investment portfolio with your favorite cash-flowing business investments like stocks and funds. Even when compared to other precious metals like silver, gold maintains better value because it is used to serve monetary purposes, unlike most other precious metals that are used for industrial processes.
