Jennifer Miller, World Executives Digest | There’s no doubt that gold played an essential role in the economies of many prosperous nations. After all, it was considered a universal currency for hundreds of years. Although gold is not a primary form of currency anymore, it can be said that it is still a solid investment and it may prove to be a valuable portfolio addition.
The price of gold rose strongly in 2016 and during the first half of 2017. As a result, many people expect it to decrease in 2018, but according to a range of analysts from banks and other institutions, that is not going to happen.
According to ABN AMRO, the price of gold can rise up to 1,400 dollars per ounce by the end of 2018. This assumption is based on the decline of the U.S. dollar, as well as on lower U.S. real yields.
Advantages of gold
Gold holds its value – Some economists argue, that the price of gold is not really indicative of its real value. To put it simply, even if the price of gold decreases, its underlying value does not change much. That happens because gold is a commodity, unlike the dollar, which is a form of fiat currency.
Hedge against inflation – When inflation takes hold, gold rises in value! Gold is priced in U.S. dollars, and any deterioration in the dollar will naturally lead to a higher price of gold. This means that gold offers a much more stable investment than cash, especially during inflationary times.
Gold is used in many products – Since gold is used in many different products, such as jewelry, computers, mobile devices etc., there is a reliable demand for it which stabilizes its price.
Liquidity – There’s nothing easier than converting gold to cash anywhere in the world. The universality and liquidity of gold make it a sound investment.
The U.S. dollar and gold
The U.S. dollar is the world’s leading currency for trade, and due to many different factors, it will constantly change between being weak and strong relative to other currencies. But why is that important? Because when the dollar is weak, gold offers a much greater value, but the opportunities to purchase gold at favorable prices come when the dollar is stronger.
Today the dollar is maintained artificially strong by the Fed’s actions, but, as it happens, it is being attacked on numerous fronts. The strong dollar has depressed the price of gold, but as the strength of the dollar is expected to diminish soon, now is the perfect time to buy gold.
During tough economic times, many people turn to gold bullions as an investment. Some families even hand them down from generation to generation. But, what’s important to know is that not every bullion is the same. Only buy the finest quality gold bullion coins and rounds. Since they are investment grade, they are well cared for.
If your gold bullion round and coins are damaged, their price will fall, and, of course, that’s something you want to avoid.
The most important thing to know is that there are many disreputable bullion dealers looking to take advantage of those who want to buy gold. If you’re ready to invest in gold bullions, then look for someone reliable with a long history. Research their experience, ask others for references, do everything you can in order to protect yourself.
When to invest in gold
Investing in gold makes sense only when inflation is expected to take hold. The earlier you detect drops in the national currency, the better, if you’re looking for a way to make a profit, that is.
If you just want to put some gold on the side, then buy it when the U.S. dollar is at its peak.
Gold can be profitable, and it is a good thing to add to your portfolio, especially if you’re worried about your country’s currency. You should always maintain a well-diversified portfolio, and investing in gold is one way of minimizing the risks.