The Top 5 Reasons To Invest In Gold
So you’re tinkering with the idea of investing in gold, but not quite sure? Well here are a few good reasons why you should turn your ‘maybe’ into ‘mission accomplished’
1) Limited Supply, Lots Of Demand
Just like every other commodity, prices of precious metals are subject to supply and demand. Every year, about 2,500 metric tonnes of gold are successfully mined and extracted from the earth. If this sounds like a whole lot of yellow metal, you are absolutely right!.
What is striking is that this supply is consistently dwarfed by an insatiable global demand. And the demand is only getting stronger
Historically, India has the world’s largest demand for gold in volume, followed by China, then the US. India has reported a staggering 25% increase in demand in 2011 compared to a year ago.
But even India is going to have to start competing for its long-time stance as number one in the market for gold consumption. Recently, due to the newly appreciating Chinese currency, sales in this country have been steadily on the rise. For China’s middle class, gold jewelry and bullion have traditionally been given as wedding gifts or on special occasions. The expected rise in price on the yellow metal, combined with one of the fastest-growing middle classes in the world, has the people of China snapping up yellow bars faster than ever before.
The newly emerging markets in other countries have brought a large population to the purchasing table that has never been there before. This new demand is putting huge pressures on the relatively limited supplies.
2) Insurance For Your Finances
Physically owning gold bullion or coin is the equivalent of having an insurance policy for your bank account. Precious metals hold their value and work like a hedge against inflation, deflation, and devaluation of currency. In times of financial stress or conflict the demand for precious metals invariably rises, and for good reason. When an emergency happens, currency looses value.
Tornados strike, hurricanes destroy, and earthquakes devastate, suddenly an account loaded with bank notes can become worthless literally overnight. Gold on the other hand works like a safe-haven for your assets. Regardless of the chaos going on in the world, an ounce of gold can buy you and your family safety, food, and transportation if the need arises. After 9/11, Americans learned that they are not immune to the terrors of the world. Anything can happen, and physically owning some of your assets in bullion and/or coins can make a real difference.
3) Balanced Portfolio
Industry experts agree that the rule of thumb for any investor is to have at least 10-20% of your capital in safe low-risk investments. There is no safer place than having your money in gold! Risk factors that affect the price of precious metals are very different from those that affect other assets like stocks and bonds.
Statistically, portfolios that are diversified with gold tend to be more robust than those with just stocks and bonds. Precious metals should be the very foundation of what any balanced portfolio should look like.
4) Prices Are Projected To Increase
Like all prices, the price of gold reflects not only the inherent value of this precious metal, but also the relative strength of the currency in which it is quoted. Every time the US government prints more money to curb inflation, the dollar is a little less valuable. If you have been reading the news over the past several years, you will know that the Federal Reserve is printing off more currency than ever before in the history of our country. The dollar is going to get weaker and other countries economies are getting stronger. These two factors are strong indicators that prices of precious metals will continue to rise. The price of gold has been steadily increasing for the last 10 years as seen in this chart taken from The World Gold Counsel’s website in June, 2011.
5) Gold Is Easy To Buy And Sell
Finally, anyone can be a savvy gold investor. With a little time, research, and common sense you can feel confident that you are making a smart decision and start buying gold. Google gold prices and you will find a wealth of live streaming information at your fingertips – this is the same information that the experts are using!
If the time comes that you need to sell your gold, you’ll find it easier than you think. Just find a reputable dealer (many people choose to sell their gold back to the broker they bought it from, but it’s not necessary), and ask them for a quote. If you are working with a dealer face-to-face, they will cut you a check on the spot. Or if you get a better quote with a fully-insured online dealer with a web presence, you mail them your gold (don’t forget to buy insurance!) and the company will write you a check and mail it immediately upon receiving your package. Selling gold is fast and painless.