By John Meyer, consultant in financial affairs – Eurasia Business News, July 17, 2024. Article no 1099
Gold prices reached new records high in 2024. On July 16, gold price jumped to a new record. Owning physical gold will protect your wealth earned through hard work from any currency fall and high inflation. Households and investors can buy some gold. You may even already own physical gold, thanks to your golden jewellery. Gold is an insurance in uncertain times. As all investors know wealth is better protected with a diversified portfolio. Here are five good reasons to own gold.
Hedge against inflation and currency weakness
Gold serves as a reliable hedge against inflation and currency devaluation. As the purchasing power of fiat currencies like the U.S. dollar declines due to inflation, gold tends to maintain its value over time. In addition to protecting wealth, owning gold can also serve as a long-term investment strategy, especially in times of economic volatility.
Safe haven during geopolitical uncertainty
Gold is considered a “crisis commodity” that retains or increases in value during periods of geopolitical instability and economic turmoil. It provides a safe haven for investors during uncertain times. The stability and enduring value of gold make it a valuable asset to hold during times of global upheaval.
Read also : Gold : Build Your Wealth and Freedom
Portfolio diversification
Adding gold to an investment portfolio can help reduce overall risk and volatility. Gold often has a low or negative correlation with other asset classes, making it an effective diversifier. Diversification is a key strategy in investment management to mitigate risks and maximize returns over the long term.
Store of value
Gold has been a store of value for thousands of years. Unlike paper currency or other assets, gold maintains its worth over long periods, allowing wealth to be preserved and passed down through generations. Investing in gold not only protects against economic fluctuations but also ensures the preservation of wealth for future generations.
Gold is a long-term store of value and this storage capacity is standardized internationally. Each troy ounce of gold has the same value. The yellow metal is an asset with intrinsic value in itself, capable of maintaining its purchasing power throughout the centuries and around the world.
Increasing demand from central banks and investors
There’s growing demand for gold from central banks (especially China) and retail investors seeking to diversify their holdings. This increased demand can support gold prices and indicate a positive outlook for the precious metal in the market. As central banks continue to increase their gold holdings, it underscores the enduring appeal and value of gold as a strategic asset.
In 2023, central banks added 1,037 tonnes of gold – the second highest annual purchase in history – following a record high of 1,082 tonnes in 2022.
These reasons highlight gold’s potential benefits as both a protective asset and a strategic investment in the current economic and geopolitical climate. As the global economy faces uncertainties, gold stands out as a reliable and valuable asset that can provide stability and growth in investment portfolios.
The gold rally follows a strong advance in the first half of 2024, with Goldman Sachs expressing optimism about the precious metal’s prospects. This positive outlook underscores the continued importance of gold as a cornerstone asset in diversified investment portfolios.
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© Copyright 2024 – Eurasia Business News. Article n°1099.
