The properties of gold make it one of the most precious metals in the world – a popular form of jewelry and gift. What if you want to invest in gold? What about gold in an investment portfolio? As we regularly monitor the price and performance of gold, here are top 10 reasons why gold has a good investment portfolio:
#1 Gold has a long history of value retention.
Since its discovery thousands of years ago, gold has been the most popular commodity in the world. Although gold no longer supports by global currencies, it remains highly precious metal, especially during the economic slowdown while other assets are losing values.
#2 Inflation is historically good for gold.
Gold has been an excellent hedge against inflation in the past, as its price tends to rise when the general cost-of-living increases. Inflation eats up cash away and treasury yields, which makes them less attractive investments. It is the main reason behind many investors are attracted to gold.
#3 The demand for gold jewelry is steadily increasing in China and India.
Gold is a precious metal and popular form of gift in China and India – the two largest consumers of this precious metal. This is one of the biggest reasons which drives the gold price always high. In India, gold jewelry ownership is highly growing in numbers. By 2016 Indian households owned more gold than the world’s top six central banks (combined).
#4 The global supply of gold is shrinking.
Gold is a very rare metal – it is another reason why it is so highly valued. At present, fewer gold mines are being explored because the gold exploration budgets are going down. On the other hand, the mining cost is rising. As a result, the rate of gold production is decreasing and the price of existing gold rising.
#5 Global government debt is rising.
Global government debt is rising and it is around 120 trillion dollars high of all time since 2008. Due to the rising risk of such big deficits a further economic crisis could be on the way. Experienced investors can easily see these financial stats and it will increase their investment in the form of gold.
#6 Central banks are increasing their gold reserves.
Since 2010, the global central banks have been the top to reserve gold. According to the World Gold Council (WGC), in 2017 the total net purchase of gold by the global central banks was 371 tons. This is also a very good sign for gold investors that they can invest some bucks in gold.
#7 Gold and US dollar.
Gold is traded in dollars. When the value of gold increases the value of dollar decreases. Bullion and the US dollar have a long back history of reverse trading. The same thing happens with gold and dollar. In fact, the precious metal gold regularly outperforms the most major currencies every year.
If you are wondering why you should invest in gold then these top reasons can be a part of your analysis.