Is gold a safe investment?
The past few years have made it abundantly clear that when it comes to your investments, "better safe than sorry" is the name of the game. From the Coinbase cryptocurrency crash to the Silicon Valley Bank failure, the economy has been turbulent at best. In the first half of 2022 alone, trillions of dollars of retirement savings were lost to a stock market slump.
As a result, investors are turning to gold as a way to protect their money. But is that a wise decision? Is gold really a safe investment, or is that just a myth? Read on to find out.
If you're interested in investing in gold, learn more by requesting a free information kit.
Is gold a safe investment?
Gold is a smart investment for many reasons. Here's why it's also a safe one.
Its value is historically stable
"Gold has been a store of value for nearly 5,000 years and has been used by mankind as a medium of exchange," Chris Battifarano, chief investment officer for FineMark National Bank & Trust, recently told CBS News. "There is no obvious reason for this to change."
Unlike fiat currency, whose value can fluctuate wildly based on several factors, gold has intrinsic value that isn't dependent on a specific government or company. It's still accepted as currency today and is often held by central banks (such as the Federal Reserve) to alleviate risk and maintain stability during timers of economic uncertainty.
Additionally, gold is a finite, tangible resource. There is only so much gold in the world, and we can't make more of it, so its value can't be manipulated the way fiat currencies can. In fact, its scarcity makes it more valuable — as demand increases, so does the price.
To find out if a gold investment is right for you, request a free investors kit now.
It's less prone to market volatility
When the economy tanks, it could take your money with it if you've invested in certain assets. Stocks, in particular, are highly subject to the whims of the market, plummeting overnight in reaction to everything from political strife to bad press for a company. Diversifying your investments with gold can help offset any losses you see from these riskier assets.
"If you think that your bond and stock portfolio has enough diversity, adding a touch of gold allocation can give you added peace of mind," says William Bevins, CFP, CTFA.
It can help you weather economic storms
When times get tough, a gold investment really shines. It has an inverse relationship with the dollar, meaning it tends to be worth more when the dollar is worth less. Whether we're in a period of inflation, recession or other economic turmoil, gold can help preserve your purchasing power and maintain value in your portfolio.
As we know all too well, economic slumps can last for years. By investing in gold now, you can safeguard your money and make it easier to ride out these slumps.
The bottom line
Gold has been prized for its value and scarcity for thousands of years. But beyond its aesthetics, it has gained a reputation as a reliable safe-haven asset. Its value is historically stable, it provides a counterbalance to more-volatile assets and it can protect your portfolio from losses when the economy is down.
Of course, as with any financial product, gold has both pros and cons. In exchange for its stability and low risk, you might see returns lower than you would with more volatile assets such as stocks. That's why investors recommend gold only make up about 5% to 10% of your portfolio.
You have plenty of options to choose from when it comes to investing in gold. You can get started today by requesting a free investment guide here.
