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Why You Must Invest In Gold Today
By: Scott Michaels
Gold. Rare, beautiful, and unique. Treasured as a store of value for thousands
of years, it is an important and secure asset. It has maintained its long term
value, is not directly affected by the economic policies of individual countries
and doesn't depend on a 'promise to pay'.
Completely free of credit risk, although it bears a market risk gold has always
been a secure refuge in unsettled times. Its ‘safe haven’ attributes attract
wise investors. Gold has proved itself to be an effective way to manage wealth.
For at least 200 years the price of gold has kept pace with inflation. Another
important reason to invest in gold is its consistent delivery within a portfolio
of assets. Its performance tends to move independently of other investments and
of key economic indicators. Even a small weighting of gold in an investment
portfolio can help reduce overall risk.
Most investment portfolios are invested primarily in traditional financial
assets such as stocks and bonds. The reason for holding diverse investments is
to protect the portfolio against fluctuations in the value of any single asset
class.
Portfolios that contain gold are generally more robust and better able to cope
with market ncertainties than those that don't. Adding gold to a portfolio
introduces an entirely different class of asset.
Gold is unusual because it is both a commodity and a monetary asset. It is an
'effective diversifier' because its performance tends to move independently of
other investments and key economic indicators.
Studies have shown that traditional diversifiers (such as bonds and alternative
assets) often fail during times of market stress or instability. Even a small
allocation of gold has been proven to significantly improve the consistency of
portfolio performance during both stable and unstable financial periods.
Gold improves the stability and predictability of returns. It is not correlated
with other assets because the gold price is not driven by the same factors that
drive the performance of other assets. Gold is also significantly less volatile
than practically all equity indices.
The value of gold, in terms of real goods and services that it can buy,has
remained remarkably stable. In contrast, the purchasing power of many currencies
has generally declined.
Traditionally, access to the gold market has been through: investment in
physical gold, usually as gold coins or small bars,or, for larger quantities, by
way of the over the counter market; gold futures and options; gold mining
equities, often packaged in gold-oriented mutual funds.
About the Author:
Treasured as a store of value for thousands of years, gold is the perfect
investment.
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