Since the dawn of time, people have kept their assets in precious metals. Sure, gold and silver were also a currency, yet, even when this was not the case, the appeal of gold was widely accepted. Nowadays, with so many other investment options (foreign currencies, stocks and cryptocurrencies), it may seem as if investing in gold may not be such a good idea. This notion is further supported by the fact that gold is currently on a slight decline. However, where some see a negative trend to stay away from, others see an opportunity to buy cheap. With this in mind and without further ado, here’s why investing in gold might still be a good idea in 2018.
Diversifying your portfolio
One of the things that a lot of people know is the fact that the price of gold skyrockets in the state of crisis. Because of this, investing in gold might be a perfect way to diversify your portfolio. According to some estimates, it is recommended to keep at least 20 to 30 percent of your assets in gold and silver, while 10 percent is considered to be the bare minimum. The way in which this works is quite simple. Even in the moments of financial crisis, some people have a surplus of capital that they intend to invest.
Seeing as how the value of most stocks seems quite volatile in those moments, they are more likely to invest in gold. After all, it is only natural for people in these situations to show more faith in commodity than in currency, especially due to the fact that most global currencies are no longer backed by gold. As the demand for gold increases, its price skyrockets. Nevertheless, this is something you need to think about in time, which is why it is usually smart to buy when the price is on a decline.
Savings, wealth or investment
Another thing you need to understand is that gold is not only efficient as an investment but also as a way of saving your assets or wealth. While some may find this trend outdated, buying gold coins allows you to place them in your own safe, without having to rely on a third-party. In an era of cryptocurrencies and stocks, where all your assets are in digital form, you can go to bed one day as a wealthy man and wake up the next as a pauper.
Even in the worst-case scenario, where the gold that you’ve invested in loses all its value, you still have it in physical form. This means that all you have to do is sit on top of it for a while and wait for its value to bounce back. Unlike companies whose stocks you buy, gold is not here for years and decades but for millennia. During this period of time, it managed to maintain hard value, which makes it into one of the most consistent wealth trends in the history.
The issue of jewelry demand
One of the things that affect the price of gold the most is the global jewelry market. In fact, one of the reasons for this decline in price is the fact that the jewelry demand is currently down in China. China and India together make up 60 percent of the global jewelry demand, however, with the impending trade war between the U.S. and China, a lot of things got a bit more complex.
Namely, one of the direct results was the loss of Chinese consumer confidence. To make matters even worse, last year, there was a cash crisis in India, where the government prohibited the use of large-denomination bills. Needless to say, jewelry was one of the commodities that were hit by this the most. Nevertheless, it isn’t unrealistic to expect that the jewelry market will recover from this in the nearest future.
Another thing you need to understand is the fact that most lawsuit rulings and settlement offers work on a basis of your overall assets worth. The great thing about gold is the fact that no one can really know how much gold you actually have. Sure, someone determined can look for your previous purchases but most (if not all) gold retailers keep this information confidential. Aside from this, you can leave your gold in a bank vault, lock it in your bedroom safe, bury it in your backyard or display it in the living room. You can even do all of these things at the same time, which makes it virtually impossible for anyone else to know just how much gold you have.
One more thing you need to keep in mind is the issue of practicality and portability. In the past, we stated that gold can be left for safekeeping in a vault or on a shelf. However, a lot of people have no idea just how much space gold takes up. This is hard to precisely pinpoint, yet a bullion that is a size of a VHS tape can be as expensive as $200,000. This means that you could literally take all your assets in a briefcase to another country. Sure, one may argue that it’s easier to do this in a bank, yet, this way, it’s much harder to get your hands on the same amount of cash. In the ideal-case scenario, you would have to give your bank a 72-hour notice, which doesn’t sound that bad, unless it’s a situation in which every minute counts.
In one of the previous sections, we mentioned that the price of gold is bound to bounce back, however, there’s no guarantee that that will happen in the next year or even next several years (while it is quite likely). On the other hand, for those who bought gold to protect their assets, this shouldn’t pose a significant problem. All in all, you can pass on all your gold to your children and your children’s children (which is something that a lot of people do). Sure, this same amount of gold might be worth more or less but its sheer quantity will remain unchanged.
At the end of the day, from this standpoint, it seems inevitable that 2018 and 2019 will be much better for gold investors than 2017, however, even if this wasn’t the case, buying gold still wouldn’t be a missed investment. All in all, this is a trend that is definitely worth your consideration.