Why Invest in Gold and other Precious Metals?

Let's answer the question "why invest in gold" or any precious metal by taking a short look back.

Since time immemorial, prudent individuals have chosen to invest in precious metals. Gold, silver, platinum and palladium have many allures beyond their sheer beauty and divine heft. The trend toward precious metal ownership remains unabated today as more folks climb aboard the bandwagon and participate in this very important market. Never before has it been easier to buy precious metals and reap their many rewards. Perhaps it’s time you joined the growing number of investors who make precious metal ownership a significant part of their financial planning.

Why Invest in Gold?: Security When Compared to Paper Currency

Nowadays, when one country sneezes, the whole world catches a cold. Financial turmoil in Greece or Spain can upset the economies of Europe and the U.S. For better or worse, all of the planet’s economies are interconnected and vulnerable to shocks from one another.

This can, and sometimes does, affect you personally — Wuhan anybody? How about 2008?

One reason the world seems more precarious nowadays is that the financial system runs on trust — specifically, trust in printed pieces of paper called currency. Take a sheet of paper worth less than a penny, print 50 $100 bills on it and it’s suddenly worth $5,000. But is it really? Precious metal investors have their doubts. Perhaps you don’t buy into the whole trust thing, and really, who can blame you? Often, when the going gets tough, countries put their printing presses on overtime and churn out a flood of new bills.

The result is hyperinflation and devaluation. It was great for Hitler in 1933, not so good for the rest of us. Unlike paper currencies, precious metals can’t simply be minted in ridiculous amounts — they have to be mined and refined, and there is only a finite amount to go around. That’s why precious metal prices go up when currencies lose value — metals have intrinsic value based on their scarcity.

Investing in Gold for Portfolio Diversification: Insurance

Economists have long known that the most efficient investment portfolios are those that diversify among many different assets — a process known as asset allocation.

The reasoning is simple: many assets gain or lose value independently of other ones, so by holding a wide variety of investment types, some might gain value when others are chalking up losses.

For example, the stock market and gold prices are not highly correlated — they move independently. Moreover, gold is negatively correlated to bond yields: as yields swoon (as during a recession or depression), gold gets stronger.

Thus, by owning up to 25 percent of your portfolio in a variety of precious metals, you can actually lower the portfolio’s overall risk.

Demand and Scarcity

As we mentioned, gold must be mined and refined before it can be used. The total amount of pure gold ever available throughout history would form a cube only 70 feet across.

The price of gold plays a significant role in mine production. You see, if gold prices dip, less efficient mines shut down, either temporarily or permanently. This eventually dries up supply and causes the price of gold to recover.

Meanwhile, the non-financial uses of precious metals continue to grow, for items such as electronics, catalysts, jewelry, medical/dental uses, and exotic scientific uses. Let’s not forget: the world population is rising, but precious metal deposits are not. Rising demand, fixed supply — it’s hard to envision anything other than long-term upward pressure on precious metal prices.

Potential Long Term Advantages

Although the prices of precious metals fluctuate, they always retain value. The same can’t be said for paper currencies. It’s wise to maintain a long-term financial viewpoint for metal holdings.

With gold, the long-term trend is your friend. And in bad times, you can use gold to obtain food, bullets and the other necessities of life, even when paper currency becomes worthless. If you take a look at long-term price charts for precious metals, you’ll see that patience is rewarded.

That can make a big difference to the future well-being of your family and descendants

Simple and Flexible Investment Solutions

Internet-based dealers have become the preferred source for savvy buyers to purchase gold coins and bullion. The best ones, such as Goldco, offer very competitive terms, fast delivery and impeccable service.

But perhaps the biggest difference the Internet has made is that now dealerships are exposed to public criticism in cyberspace when they act unethically or provide poor service. The Internet acts like a beacon to illuminate dishonest dealings and tarnish the reputation of less-than-honest dealers.

Are you ready to begin adding precious metals to your portfolio? If so, check out goldco.com, the Internet’s premier precious metals dealer. For those looking to begin a gold IRA, make Goldco your custodian to ensure honesty, fair dealings and low expenses. Hopefully we've answered "why invest in gold" and If you already have a gold IRA, contact Goldco for a convenient IRA rollover kit so that you can reap the ongoing benefits of honesty and value. you can also read our review of Goldco to get the full picture. 

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