Gold has a long stable history, and it hasn’t disappointed its investors in the long run. Moreover, it performed excellently in 2019, despite the chaos in the world due to the onset of COVID-19. Currently, the price of gold is over $1800, and one can observe an increasing trend in its price.
Investing in precious metals can help you divert your risk. And gold is one of the worthiest precious metals in the world due to its uses, and it’s related to prestige.
Is Investing In Gold Still Worth It?
Investing in gold was worth it in the past, and it still is. Here are some of the reasons why investing in gold in 2020 could be wise a decision:
The US Dollar
There was only a minor movement in the US dollar in 2019. It was up by just over 0.2%. However, the price of gold increased by over 18%. If you’ve been investing in gold, you’ll already be aware of the inverse relationship between the cost of the gold and the value of the US dollar. The rise in the US dollar is usually followed by the fall of the gold price and vice versa.
The FOREX investors want to hold US dollars in the time of uncertainty. However, this was not the case recently. It’s due to the present trade war between the US and China. If the dollar remains unmoved or stagnant, you can expect the price of the gold to increase in the future as well.
Demand For Gold
There’s plenty of gold products you can purchase from the market. If you’re interested in buying gold, you may check out: https://www.oxfordgoldgroup.com/product-category/gold-products/
The demand for gold all over the world has been increasing recently. With the fundamental law of economics, the price of the gold will increase due to the increase in demand. Will this upward trend increase in the upcoming years as well?
There’s a good chance the investors have bought gold to hedge against uncertainty. With the state of the current market moving towards recession, you can expect investors to buy more gold in upcoming times. The economic effect of COVID-19 might extend to years, and it’ll take for the market to rebound from its impact.
As Warren Buffet said, “It’s not wise to put all your eggs in a single basket.” Investing in the stock market and real estate is a great choice. However, both these investments won’t help you during the time of recession.
One of the great ways to diversify your portfolio is by investing in precious metals like gold. There’s usually an inverse relationship between the price of stock and gold. If you’ve got a substantial amount of gold in your portfolio, you can minimize your loss.
The inflation rate in the US is currently around 2-4%. It’s similar in other parts of developed nations as well. However, people claim the inflation rate is higher than 2-4%. If you check out the inflation rate of developing and least developed countries, the inflation rate is higher than 5%. And it may even surpass 10%.
Inflation leads to an increment in the cost of living. And the currency power loses its value at a steady rate due to a fiat system. The people tend to store more gold when their currency loses its value, so you can expect the price of gold to maintain its increasing trend.
Central Bank Reserving More Gold
Central banks all over the world are purchasing more gold reserve. It has been increasing over the past ten years, and this trend isn’t likely to stop soon.
The increment in the purchase by central banks will lead to a further increase in the price of gold in upcoming times.
Upcoming Economic Events
There has been a lot of prediction about the upcoming recession and stock market crash. And the forecast is getting more reliable due to the recent COVID-19 pandemic. During the recession, you can expect real estate and the stock market to crash.
The price of gold will not have much impact, as one can observe in history. Due to this reason, you can expect your investment in gold to be fruitful.
New Mines and Supply Constraints
The supply of gold increases with the investment in new gold mines. However, the fresh supply from new suppliers is set to decrease. The number of gold discoveries is low, and the investment in new gold mines is not significant enough to dramatically boost the supply of gold.
The supply constraints will make gold more valuable in the future.
Does investment in the gold mean you’re 100% guarantee to make a profit? Like all other investments, gold has an element of risk in it. You might lose money if it performs poorly in the future. And it’s not wise to invest all your money in gold.
With that said, the risk of losing money in your investment in gold is lesser than other assets. And it’ll prove to be a better diversification strategy if you invest in gold. Learn about finance, and start allocating your investment in gold to ensure a better future.