Why invest in gold? There is no question that gold should make for an adequately diversified portfolio. But why is investing in gold beneficial to your investment strategy?
Well, quite simply, gold is and will always remain a universally finite currency, which all central banks in the world hold. Did you know that almost all central banks globally, became net buyers of gold in 2009?
That was the very first time that this happened since 1988. In 2009, the Indian Central Bank purchased approximately 200 tons of gold from the International Monetary Fund, which has been deemed as the single biggest gold purchase to have ever occurred in a limited time period, which is 30 years.
In the same way that you cannot consider your family home as an investment, it is important to understand that gold bullion can also not be considered as a viable medium of investment per se.
Instead, gold bullions offer a financial back-up when you’re experiencing a ‘rainy day’, rather than an investment it is considered as savings.
So, gold bullion should either be in your personal possession or given to a third-party for secure storage – however, it should never be traded.
Have ever heard anybody trade their insurance policy? Why? Well, it is primarily because any form of insurance is a powerful form of financial backup and security, which is why one must never trade physical gold.
It is important to understand that gold is and will always be regarded as a strong, safe-haven asset, which can be converted into money when the time and need require so.
Gold is also very effective if not the perfect way to preserve wealth and ascertain that it gets passed down from generation to generation.
And once you successfully incorporate a core holding of gold bullion into your investment portfolio then different but relevant investments like those in mutual funds and mining stocks as well as a variety of speculative and critical gold investment options can be taken into account.