• Home
  • About
  • Advertise
  • Contact
  • Policy
  • Guest Post
  • Archive

One Cent At A Time

A Personal finance blog to get rich

  • Email
  • Facebook
  • Pinterest
  • RSS
  • Twitter
  • Beautiful Life
  • Becoming Rich
  • Beginners Guide
  • Extra Income
  • Productivity
  • Saving Money

Why You Should Include Gold In Your Investment Portfolio

July 30, 2021 1 Comment

Share this:

  • Tweet
  • Email

Gold has a history that crosses countless borders and thousands of years. For these reasons and others, it’s respected globally. The first coins that contained gold date back to approximately 650 B.C. Around a century later, during King Croesus of Lydia’s reign, pure gold coins were made for the first time.

Why Investors Move to Gold And Silver During Recession

While many currencies of the past have faded away, gold is something that people continue to hold onto. Gold continues to be valued by modern economies, which is why it has held its worth. Gold is often treated as a form of financial insurance. This metal can be used in place of other currencies.

Here are eight reasons to consider including gold in your investment portfolio.

What to Keep In Mind:

* Gold has been valued for centuries across many different cultures

* Gold can diversify a portfolio and protect against inflation and deflation

* Since gold is valued worldwide, it can be used to protect finances during times of instability or uncertainty

Gold Continues to Hold Its Value

The value of coins and paper currency has fluctuated wildly over time. Gold, however, has continued to be valuable. For many, gold is perceived as the best way to preserve wealth between generations. Even before gold coins were produced, ancient people valued this precious metal for its many unusual properties.

While gold can be melted won over a flame, it won’t corrode over time. This makes it ideal for use as a coin. The color of gold is also very distinctive. Gold has heavier atoms and faster-moving electrons, which allows it to absorb some light.

This was something that was not discovered until Einstein’s theory of relativity.

It’s a Way to Diversity a Portfolio

To create a diverse portfolio, it’s necessary to seek out investments that are not closely linked. Gold is ideal for this. Across history, its correlation to financial instruments like stocks has been negative. This has also held in recent histories:

* Gold thrived in the 70s, while the stock market struggled.

* Stocks surged throughout the 80s and 90s, but gold did poorly.

* In 2008, many consumers moved their money to gold, which contributed to a decline in the stock market.

When a portfolio includes stocks, bonds, and gold investments, the portfolio will be far less volatile, which means the risk to the investor will be much smaller.

The U.S. Dollar Isn’t Always Strong

The U.S. dollar is considered to be a vital reserve currency, but during some periods, the dollar becomes weak against other currencies. For example, many people invested in gold between 1998 and 2008, which lead to an increase in the value of gold. During this decade, gold prices nearly tripled.

Near the start of 2008, gold was valued at $1,000-an-ounce. Values continued to rise and nearly doubled between 2008 and 2012 when they rose above $2,000 an ounce. Several factors contributed to the decline in the value of the dollar, such as trade deficits, the United States’ substantial budget, and a rise in the money supply.

It Can Serve As A Hedge Against Inflation

When the cost of living rises, the price of gold typically increases. This is one of the reasons it has a long history of being used as an inflation hedge. The stock market has plummeted across the last 50 years when inflation has risen, but gold prices have gone up.

Why does this happen?

Inflation directly impacts the purchasing power of a currency. Since the pricing of gold is related to these units of currency, its value continues to rise. Gold also tends to hold its value over time. This has caused many people to invest in gold when they believe that the value of their local currency is on the decline.

It Can Protect Against Deflation

When the activity of businesses slows, prices decrease, and the economy is brought down by extensive debt, it is described as deflation. This has not occurred on a global level since the 1930s when the Great Depression took place.

However, there was some deflation in parts of the world after the financial crisis in 2008. The purchasing power of gold skyrocketed during the Depression, even as other prices were plummeting. People opted to hold onto cash during this uncertain time, and it was far safer to keep assets in gold.

Worldwide Uncertainty

Gold doesn’t just hold its value in periods of financial instability. It also remains stable during times of geopolitical instability. Because of this, it’s common to see gold described as a “crisis commodity.” It’s considered to be safe even during times of worldwide tension.

An example of this is the crisis involving the European Union. The uncertainty surrounding the union lead to price increases for gold. A lack of confidence in governments can have a positive impact on gold’s value.

Constraints on Supply

From the 1990s onward, the majority of gold available on the market has come from global central banks, which have provided gold bullion from their vaults. In 2008, the selling of bullion saw a significant decrease. Furthermore, gold mining has been on the decline since 2000.

Data from the BullionVault website shows that yearly output from goldmines was at 2,573 metric tons in 2000 and fell to 2,444 metric tons by 2007. Data from the U.S. Geological Survey does say that gold production increased in 2011, hitting an output of almost 2,700 metric tons.

Still, because bringing a new mine into production can take as long as a decade, the gold supply is always limited. When the supply of gold is reduced, gold prices typically rise.

The Demand for Gold Is Rising

The demand for gold has increased globally because of an increase in wealth from emerging markets. In these economies, gold often has a significant cultural role. An excellent example of this is in China, where it is tradition to use gold bars to save.

Gold demand has remained steady in this region. In India, gold is used in many ways, including the production of jewelry. India is the second-largest consumer of gold globally. The demand for gold tends to be particularly high in India’s wedding season, which takes place in October.

Investors are also more interested in putting money into gold. Commodities like gold are being seen as an increasingly important investment class. To back this up, in 2019, SPDR Gold Trust became the largest holder of gold bullion in the world. It is also one of the United States’ largest ETFs.

What to Remember

The value of gold tends to increase at the same time that the value of other investments, like stocks and bonds, decreases. Because of this, it belongs in all properly diversified portfolios. Even though gold has shown some short-term fluctuations, its value has remained stable over time.

Across history, it has served as an inflation hedge and as a means of protection when other currencies have eroded in value. For these reasons and others, you should strongly consider investing in gold.

LIKE THIS POST?
Thank you for subscribing.
Something went wrong.
I agree to have my personal information transfered to MailChimp ( more information )
Join our community of 8000+ subscribers to increase your net worth and build wealth
We hate spam. Your email address will not be sold or shared with anyone else.

Share this:

  • Tweet
  • Email
The tool that changed the way I manage my personal finance - Personal Capital, The Best Free Personal Finance Tool

Want to start a WordPress blog now? The onecentatatime.com blog is hosted by Siteground Web Hosting. For only $3.95 a month, Siteground can help you set up and host your website/blog quickly and easily.

About the Blogger Hi I am SB, a personal finance enthusiast with a career in software development. I am an immigrant to the USA since 2005, after being born and brought up in India. This 40 something technocrat lives and breathes personal finance whenever he gets time from the day job, job as a husband and a dad

Some links on this page may be affiliate links, if you make a purchase following the links, I may earn a commission. Read affiliate disclosure here
« How to Make More Money and Grow Your Wealth
50 Habits of Personal Finance »

Comments

  1. Alexander says

    August 7, 2021 at 2:22 AM

    Gold has always been a healthy way of investing your money and getting returns. It is one of the precious metals in the whole world and demand for it is increasing day by day. People used to invest in gold in the form of jewellery, gold bars, and various other ways. Digital investments are getting popular day by day and gold trading is a good form of investing your money. Online traders can take advantage of the daily price movement of gold.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.



Create your own blog in 20 minutes and $20

Personal Capital, a free tool to change your financial health today

I use and suggest Upstart, for your personal loan need

CreditKarma, a free tool to check your credit scorey

I use Coinbase, for my crypto investments

101 Cents at a Time

101 Ways to Earn Extra Money on the Side
201 Frugal and Perfect Birthday Gifts
101 Ways to Save Money Everyday
101 Ways to be Better and Successful at Work
101 Ways to Save Environment and Energy
101 Frugal and Romantic Anniversary Ideas
101 Low-Cost Men's Fashion Ideas
101 Personal Finance Tips
101 Ways to Reuse Household Stuff
101 Things to Do, When Nothing to Do
101 College Graduation Gift Ideas
100 Tips for Ecommerce Startup
101 Ways to Enjoy Indoor During Winter
101 Ways to Beat Procrastination

Popular Posts

Quick Cash - How to make $100 legally, in a day
Living well on less than $15,000 a Year
Top survey sites for side income
What to do when auto repair goes wrong
Where should I invest my money now?
20 Ways to be productive and happy at work
51 Ways to get out of debt
Be a better person in 15 days, 15 ways
Income ideas for retirees and senior citizens
51 side jobs for college students
Urgently need a large amount of money?
Should I buy or should I rent?
Best Personal loan providers
25 Ways to save environment
25 DIY car repairs to save money
How to decorate office cubicle
How to show your wife you care
50 Financial Rules for Success
51 Frugal weekend family activity ideas
Become Rich By Saving 1 Hour Of Daily Wage
How much do I need to save for retirement?
How to negotiate your salary

Follow us on FaceBook

About Author

SB

Blogger by choice and IT manager by profession. Finance is my passion and gardening is my greatest satisfaction. Born in India, settled in US, Husband and a father. I created this blog in 2011 with a vision to help others. Thanks for your patronage. More info on my "about" page.

View all posts


Subscribe

Join our community of 5000+ subscribers to increase net worth and build wealth

Advertisements

Personal Stories

How I got a new HP computer replaced
Was COVID circulating in USA in fall of 2019?
How my credit score went up 800+
Why I didn’t invest in Bitcoins
How I controlled impulses to buy things
Why this blog is named One Cent at a Time

Subscribe via Email

Site Disclaimer

Disclosure of Material Connection: Some of the links in this web site are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. Regardless, I only recommend products or services I use personally and believe will add value to my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
Read full Affiliate disclosure


One Cent at a Time is published by SB. The opinions expressed herein by him are his own and not those of his employer or anyone else. All content on One Cent at a Time is for entertainment purposes only. By reading this blog, you agree that SB and/or One Cent at a Time is not responsible for any actions taken after reading this blog. For the full disclaimer, click here .

Major Media Mention

One Cent at a Time Media Appearances

Copyright © 2023 One Cent At A Time · Designed by Nuts and Bolts Media