With it’s popularity dating back centuries, gold has been valued as a commodity since ancient times. Investors value gold for a number of reasons, making Gold a very common and important investment option today. In this blog, we’ll go over reasons why investors love gold so much.
- Store of Value: Gold’s historical function was as a store of value and this is one of the main reasons influencing investors’ appreciation of the precious metal. Unlike, fiat currencies like the Canadian Dollar or American Dollar, which can be printed at will, Gold is a limited resource and it cannot be manufactured easily or duplicated. Mining Gold is the only source of producing gold as creating even a gram of this metal in a lab takes enormous amounts of energy, making it not worth the time and effort to try. Gold’s scarcity makes it a desirable option for investors looking to preserve and hedge their wealth against economical phenomena like inflation and currency devaluation.
- Safe Haven Asset: Gold is known as one of the main safe haven assets in the investment world, as it performs remarkably well when the economy is facing uncertainty and there is volatility in the markets. Investors frequently turn to companies who sell gold to make investments to hedge against the volatility and to protect themselves against inflation.
- Diversification: To diversify your investment portfolio, gold is an amazing option. It reduces risk in your portfolio as it has very low correlation to other assets found in portfolios like stocks and bonds. Gold can help steady a portfolio during market volatility and can act as a hedge during turbulent times.
- Inflation: Precious metals like Gold and Silver are frequently seen as strong hedges against economic phenomena like inflation which diminishes a currency’s purchasing power over time. Investors who are looking to maintain their purchasing power throughout longer periods of time turn to precious metals as their prices mirror inflation. As the value of your dollar falls, gold rises.
- Demand: Gold does not only have investment uses, but also practical uses such as for jewellery, dentistry, electronics, and aerospace. For this reason, Gold will always have a demand, supporting its value as an investment. This everlasting demand means that when investors go to sell their gold, there will always be a buyer.
- Limited Supply: There is only so much gold in the world. If you were to take all the gold which has been mined in the world, you could fill up 3.42 Olympic sized swimming pools. This limited supply and even more limited production means its value is thoroughly supported. Gold cannot be printed like fiat currencies are, it can only be retrieved from those who are mining for gold. Gold mining companies around the world are the only ones who can introduce new gold into the markets.
All in all, there are plenty of reasons gold is loved by investors such as its historical role as a store of value, its power to act as a safe haven asset, its diversification attributes, its ability to be a hedge against inflation, its demand across a number of industries, and its constrained supply. Gold is thoroughly loved by investors and collectors alike as it is an amazing way to safeguard your wealth and diversify your portfolio. Even gold for sale has intrinsic value to companies who conduct gold refining. Scrap metal prices are relatively lower than the market price of gold depending on the purity however, sellers can sure to get top dollar for their scrap metals at Instant Gold Refining.