Traditional investors might feel secure and pleased with the current state of their portfolio, which will most likely consist of the usual stocks, equities, and bonds. While there is nothing out of the ordinary to investing in these types of assets, it is not the most secure option. Expected fluctuations within these markets, which can happen from time to time, can prove harmful to those who have all of their finances invested in them. It is for this reason that many expert investors recommend diversifying your portfolio, primarily with alternative investments.
While you don’t want to store all of your eggs in one basket, the question is which alternative investment is right for you. You can spread your investments across different industries and particular assets, but the issue presented is that all of these sectors affect one another. Even investing in something like real estate can have its downsides, as crashes in other markets will have a similar effect on your properties. It is for this reason that it is especially important to have assets that will not be largely affected by market fluctuations.
Enter in gold bullion. While the gold price sees fluctuations, it is a proper hedge against the market and its worst fluctuations. The reason for this is that gold, and most other precious metals, are not directly tied to the economies and markets of countries around the world.
While the gold price might seem steep for people looking to make slight diversifications, it should be stated that you can effectively decide how much you’d like to invest in the precious metal. Gold bullion bars, coins, and rounds can be purchased in various weights, quantities, and designs. While there are basic items that are valued for their fineness, there are others, such as American Eagle coins, that are expected to appreciate over time.
When it comes to stocks, bonds, equities, and exchange-traded funds (ETFs), the usual risk level—the probability that a return on investment (ROI) will be lower than expected, if not negative—is normally considered to be “medium,” meaning that there are fluctuations in the market that might cause you to lose on an investment or simply garner a lower ROI than expected. However, for precious metals like gold, the financial risk is considered to be very low, making it one of the most secure classes of assets.
Furthermore, gold not only works as a hedge against market fluctuations, thus making it a secure investment alongside other assets inside of your portfolio, but it is a useful hedge against currency depreciation. Recent history has shown a decrease in major global currencies when compared to the intrinsic value of gold.
While the U.S. dollar was once tied to the value of gold and exchange rates with global currencies were once determined based off of the gold price, this is no longer true. Once this tie was severed in 1971, investors turned away from assets based off of the value of the U.S. dollar, investing instead in gold bullion. Since that time, the gold price has steadily increased, with it seeing notable growth around the time of the 2008 U.S. recession.
Although the growth of the gold price since the 1970s might seem problematic, worrisome almost, to some, many experts believe that the gold price would not drop even if the value of the U.S. dollar were to rise once again. And, even if the value of gold were to notably decrease, experts wouldn’t see it ever dropping much lower than $300/oz—the likelihood of this even happening being quite low. The purpose of diversifying your portfolio is to protect your investments and overall finances from market fluctuations. By adding an investment such as gold, you are fortifying your portfolio with a low-risk investment that can be expected to continue growing in value while major currencies depreciate with time.
Take a closer look at the gold bullion we offer here at Provident Metals. You might not expect to have one of our numerous, fine items catch your eye, even as it acts as a security measure on all of your other assets. Reach out to one of our many representatives if you have any questions on how to place an order or for bullion storage tips!
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