Gold. It is often viewed as an investment, with others viewing it as finding treasure.
It has certainly been a rewarding investment for those who have held onto it for a while, considering it has gone up in value by about $1,450 since 2000.
But, does that make investing in gold a good idea for the foreseeable future?
We weigh the pros and cons of gold investment.
Inflation Insurance
Gold is often considered an insurance policy against inflation. In theory, this makes sense, because the US dollar is supposed to be backed by gold.
There is a history of money being used as receipts when the US dollar was first circulating as proof that somebody would pay in gold later. But then, they just started using the money.
Considering $1 in the mid-1990s is worth almost $2 today, there is certainly proof that gold can protect you from inflation because it is a commodity that people seem to always want to buy, especially when they do not feel like they can rely on the dollar.
So, remember the Housing Crisis in 2008? Gold went from being worth about $850 per ounce in late 2006 to around $1,150 per ounce by the end of 2008.
It has proven it can be one of the few commodities that rises in value in times of uncertainty. If you are someone that likes to prepare for those situations, the American Hartford Gold Group is recommended, with this review on them: https://www.raremetalblog.com/american-hartford-gold-group/
As an Investment
If you are someone that purely wants to bet on something rising in value, gold has shown to have a good history there. It was valued at less than $300 per ounce around 2000 but today it is worth close to $1,750 an ounce.
But, maybe you are someone that likes to rely on more recent history to see if gold is a good investment. Admittedly, it has been slightly down in 2021, with very little movement in the last six months.
However, if you look at its performance in the last five years, you would see a different story. This is because gold has gone up by about $420 in value per ounce during that stretch.
That means even if you bought gold sometime in 2016, you would have seen about a 74% increase in value on your investment. So, gold is more of a long-term investment, and it might pay off if you have the luxury of being able to hang onto it during less lucrative stretches.
Political Uncertainty
Similar to insuring against inflation, gold can arguably be insurance against an unstable economy and political situation within a country. Some of you have seen other country’s paper money essentially become worthless, such as with Venezuela and Ecuador.
This would be another time to have gold because it would be more difficult to argue that it is not worth anything to the rest of the world than a certain country’s paper money.
Consider Investing in Gold
Investing in gold may not be the most widely discussed option these days but it can still be a good idea for someone who wants to hedge bets and diversify assets. Are you ready to invest in gold?
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