Why Should You Trade Gold?
Since ancient times, gold has been known to play a crucial role in the rise and fall of empires. Back then, Egyptians and the ancient Greeks saw gold as a valuable social status symbol and solidified the metal as a form of legitimate currency. Fast forward to today, where, although gold is no longer the main form of currency, it still holds remarkable value and has proven to be a good choice for long-term investments.
Investing in gold is not just for the seasoned traders, either — with a bit of research, anyone can do it. Below are some of the reasons you can and should consider trading gold.
A stable value
Gold has been hailed time and again as an effective hedge against inflation. When the cost of living rises due to hyperinflation, the metal’s price increases with it. This means when things look dire over at the stock market, people who have investments in gold can sit back and watch their value skyrocket.
Best crisis commodity
People turn to gold when confidence in governments wane. When there is tension between two countries, or when market trends become erratic and hard to predict, gold turns into a crisis commodity. FXCM notes that this is because of gold’s enduring value as a commodity, as it is not bolstered by an underlying economy and not minted by any bank or country. This level of independence makes owning it safer and more reliable than any form of official currency.
Diversifying your portfolio
A recent post here on Circle Markets entitled, ‘Reduce Risk by Diversifying Your Portfolio’ emphasized the importance of proper asset allocation as it is key to reducing risks associated with a fluctuating market and helps protect you against sudden crashes of any single trading commodity or currency. Investing in gold is a great way to avoid putting all your eggs in one basket, and is a relatively secure one compared to other investments available.
Gold is a universal commodity and can be traded almost anywhere in the world. Although this may be true for other assets too, their value is often subject to political shifts. Additionally, the metal is great for when you need cash at a moment’s notice, as it’s easy to liquidate it in most countries.
Now you may be thinking, if you wanted to invest in gold, would you just buy it from a pawnshop and keep it in a safe in your basement? That’s certainly one way of doing it, and some investors choose to buy gold in the form of jewelry, bullion, or coins. Of course, the downsides include the risks involved in storing them safely and the costs of having them insured.
It may be more practical to invest in Gold ETFs, or gold commodity exchange-traded funds, which allow you to own gold without actually having to physically hold on to it. You can also opt to buy stocks in a company that produces gold since its stock value should be strongly tied to the value of gold.
Whatever method you end up choosing, what matters is that you prepare thoroughly should you decide to start trading and investing in gold for financial security and wellness.