Gold has long been seen as an investment that provides diversification or protects wealth during times of economic or international instability.
An investor might find themselves confused over whether to purchase physical gold or invest in gold stocks or funds; an experienced financial adviser can provide valuable assistance.
It’s a safe haven
Gold has long been known for being an economic safe haven, performing admirably during economic downturns when riskier assets like stocks or real estate fail to perform as expected. Furthermore, investing in gold also protects purchasing power during periods of inflation when its value decreases significantly.
Gold prices are unaffected by earnings reports, dividend or interest payments or unhappy shareholders; rather, its price is solely driven by supply and demand forces. Physical gold bullion investing provides one of the safest ways to own this precious metal as government cannot seize physical bullion investments (unlike paper investments such as mining stocks or exchange-traded funds) so you’ll know its worth even in times of economic or political distress – providing another reason to own gold!
It’s a diversifier
Gold can serve as an ideal diversifier in any portfolio as it does not present the same risks as stocks and bonds, such as earnings reports or dividend payments, interest rate fluctuations, or inflation risk. Furthermore, its value remains stable over time.
Gold can quickly and efficiently convert physical assets to cash, unlike some physical assets such as artwork that require long and complex processes to sell on global markets. Gold’s liquid nature allows it to be quickly traded.
Gold offers proven returns, liquidity and low correlations – an excellent combination for diversifying your portfolio. However, be mindful to follow a solid investment strategy; make adjustments according to your risk-appetite and consult a Morgan Stanley financial advisor about determining your ideal allocation.
It’s a store of value
Gold has long been revered as an effective form of value storage, as its low risk profile compared to paper assets such as stocks or equity funds has provided investors a safe haven.
Gold investment offers several distinct advantages over investing in other forms, namely liquidity. Investors can sell physical gold bullion to cash during stock market trading hours or through an ETF in less than a week compared to selling stock through brokerage accounts or even art collections that often take months and require significant commission fees.
While some criticize gold for failing to generate income, they fail to appreciate that this isn’t its primary function; rather, gold serves to protect wealth and standard of living during times of economic, monetary, or geopolitical crisis. As evidenced by its performance during previous crises, it likely will continue to provide protection.
It’s a hedge
Hedge investing refers to taking an opposite position on related assets to reduce risk. Gold can serve as an excellent inflation hedge and protect against geopolitical events such as currency devaluation. When inflation hits, prices spike exponentially – gold tends to increase accordingly, providing investors with an effective inflation protection.
Physical gold bullion remains an excellent way for investors to diversify their assets, but more liquid investments such as ETFs may offer better options. They’re easily exchangeable for cash at current market prices and the process is faster than dealing with artwork collectibles or stocks in your brokerage account.
Please be aware that these ETFs don’t offer full physical backing – therefore not providing as much protection compared to physical bullion – yet can still serve as an excellent way of diversifying your portfolio despite additional management and storage fees.