Although the price of gold may be volatile in the short term, it has always maintained its value over the long term. Over the years, it has served as a hedge against inflation and erosion of major currencies and is therefore an investment worth considering. The point here is that gold is not always a good investment. The best time to invest in almost any asset is when there is negative sentiment and the asset is cheap, which provides substantial upside potential when it returns to favor, as stated above.
Another benefit of gold as an investment is diversification. Reducing risk is key to a successful long-term investment strategy, and gold is not positively correlated with stocks, bonds or real estate. While it's possible to create a diverse and relatively low-risk portfolio with just these three assets, adding some gold can complete your portfolio and reduce risk even further. Regardless of how the economy is doing, it's always a good idea to reduce risk to an acceptable level.
We also offer a basket of gold stocks that is made up of the top 15 stocks of the gold mining industry in the U.S. UU. This includes Barrick, Franco-Nevada and Newmont. Basket trading helps to diversify your portfolio and the risk of a stock underperforming can be covered by another within the collection.
One of the advantages of investing in gold as a hedge against inflation and stock market volatility is that you can own the physical metal. Bullion is easy to trade and outside the financial system, making them the ultimate hedge. Many supporters of gold suggest that it is a good hedge against rising prices. However, the facts do not support this statement.
Gold is usually a better protection against a financial crisis than a protection against inflation. In times of crisis, gold prices tend to rise. However, this is not necessarily the case during periods of high inflation. If there is a financial crisis or recession on the horizon, it would be wise to buy gold.
However, if the economy is in a period of high inflation, it would be wise to approve.