Have you decided to invest in gold? Do you want to know why people invest in gold? Is investing in gold a good idea?
Going for the gold
Gold has historically been a good hedge against inflation. However in recent times the price of gold has fallen drastically due to oversupply situation as more and more central banks sell their gold deposits to settle outstanding debt.
So is gold still a good investment? Yes it is over the long run purchasing gold at lower prices can yield significant gains as traditional currencies such as the Dollar, Euro and Yen have stumble due to economic and natural disasters – Gold seems to becoming a more attractive investment.
All currencies are now fiat and none have the backing of gold so they have to be defended by respective central banks such as the Federal Reserve. The value of currencies now is purely determined by the demand and supply of that currency and this is to an extent determined by interest rates and now central banks tend to directly intervene in order to ensure no major fluctuations.
However, we have now witnessed more than one economic crisis as markets driven by debt are unable to honour repayment schedules and credit worthiness of most bank portfolios continues to decline partly due to adverse economic conditions and natural disasters.
In a world of growing uncertainties we can expect interest in gold to grow and more and more high net worth individuals would prefer a hedge against currency risk and this can be managed by having part of the portfolio invested in gold.
Face Value V Collectible Value
Certain rare gold coins have a higher value than the face value or the weight. So more people tend to want to invest in these collectibles as these tend to appreciate in value faster than other gold investments such as gold biscuits or jewellery.
But before investing a large amount in collectible gold it is important to ensure that you are making the right investment. So having the items appraised by a valuer is a good idea as the appraiser will have a much better idea about how the value will appreciate over a period of time.
Gold and retirement funds
Many individuals are now looking at gold IRA’s as a viable investment as interest rates have declined over time reducing the face value of retirement funds. It is expected that Gold IRA’s will outdo traditional investments as currency tends to lose value faster due to inflationary factors affecting the economy. So investing part of your retirement funds in Gold IRA’s is an important way of hedging against inflation and losing the face value of your retirement funds.
Before making investment please consult your financial advisor regarding the appropriateness of investing in gold to meet your portfolio objective – which may differ from situation to situation.