Throughout history, gold remained a common commodity that people used as one of the currencies in the past. Currently, gold is a preferred investment option and serves as a status symbol.
Gold bars investment is prevalent in some countries like India. In fact, it’s intertwined with India’s religious and social customs.
You can also gift or buy gold at religious ceremonies, festivals, and occasions, including marriages and childbirth.
So, should businesses and individuals consider making a move when it comes to gold investment? Yes, gold investment is a viable option, and here are reasons explaining why:
Table of Contents
Save Cash For The Future
According to Idnan Malik, the future finance specialist, saving cash for the future is important, especially when you earn income regularly. However, you cannot invest a small amount of cash when you consider real estate as an investment.
Regarding this, the easiest thing you may do is to invest when it comes to physical gold. This can protect your cash for the future and even guarantee you more returns.
Suitable For Portfolio Diversification
Historically, gold reduced losses during economic instability or distress in the market and improved portfolio risk-adjusted returns. Its correlation to main asset classes has always been low during recessionary and expansionary periods.
The key goal to diversification is to find investments, which are not correlated to each other closely. For many years, gold has had a negative correlation to stocks, making it suitable for diversification.
Negative Or Low Real Rates
When it comes to the backdrop of high inflation, most fixed-income investors look for a high interest rate so as to protect their buying power.
However, the current environment is calling for a low-interest rate. Globally, a low-interest rate is expected to remain low, resulting in low real or negative interest rates.
Gold is among the several tangible assets that create a perception of safety in investors. Buying gold is easier than buying tangible assets like real estate.
Due to this feature, gold is one of the free assets from such concerns. Though this comes with some risks, making it necessary for investors to be careful.
Simple To Liquidate
Among the reasons to make a financial investment is that you regard it as a backup plan in case you require it in the future. Gold is among the easiest assets to liquidate.
In the case of an emergency, you can sell gold to your preferred buyer and make ends meet. While many buyers are ready to purchase gold, the return rate may not be as good as expected.
In times of need, you can liquidate gold investments much faster compared to physical investments. Unlike real estate properties, there is no lock-in time for gold investment except in sovereign gold bonds.
However, the redemption of physical gold depends on the purity amount, current market price, and weight of gold.
Reasons for having gold are beyond just the possibilities of price rising in terms of inflation. Gold is also a worthwhile investment at every step of the way, be it for your personal equity risk or country debt.