Gold has a rich history in society, culture, and economy. For over a millennia, gold has been used as a store of value, a medium of exchange, and to signify both status and wealth.
Today, people still buy and own gold for many reasons. Whether it’s for jewellery, industrial purposes or financial investment, gold as a physical store of value means it will always be used as a form of insurance currency.
Here are the top 10 reasons why you should buy gold today.
1. Gold prices increase steadily over time
Both investors and individuals are drawn to gold because it has long held its value over time. In the long term, gold has proven to stably and reliably grow. In 20 years (2000-2019) gold has confidently grown by an average of 8.91 annually.
2. Gold is an inflation hedge
An inflation hedge is an asset class that protects your purchasing power from decreasing. As the cost of living increases, fiat currency loses value. Gold’s reliable growth is why many investors keep gold to offset inflation rates. Historically, gold prices tend to perform better than national currencies on the whole, especially when fiat currency drops in value.
3. There’s an increasing demand for gold
Did you know India and China make up 50% of the annual demand for gold? Even in its most popular form as jewellery, gold is often used as a status symbol and is traditionally used to store a person’s wealth.
As the global economy continues developing, the demand for gold in bars, coins, jewellery and other industries is rapidly increasing.
4. Gold supply is limited
Another reason the precious metal is so highly valued is that there is a finite supply in the world (unlike paper currency which can be printed). Fewer gold mines are being discovered and mining costs are increasing. This means less gold supply every year; coupled with rising demand, the value of gold will only continue to increase.
5. Gold is a safe haven
Gold is often considered a ‘safe haven’ or ‘crisis commodity’ by many because it holds its value during geopolitical crises (such as war, trade tensions and political conflict). Many people often seek to store gold as a sort of wealth insurance during a geopolitical crisis; because, during such times, gold has proven to outperform other investments.
According to one study, gold is the best asset to safeguard against a potential market crash.
6. Central banks and governments store gold reserves
Gold’s nature as a safe haven asset is why central banks are one of the highest net buyers of gold. This is because governments and banks see gold as both a commodity and currency – as a standard and medium of exchange. Keeping gold provides governments with a form of wealth insurance and peace of mind in the face of economic collapse.
7. Gold is inversely correlated to the USD
Gold has an inverse relationship with the US dollar – whenever the USD decreases, gold gains in value. There are two reasons for this:
- When the USD falls, the value of currencies in other countries increases; the demand for other commodities such as gold also increases, further pushing up the price of gold
- When investors lose faith in the USD, they turn to other alternative investments such as gold, which drives gold prices up even further.
8. Gold is a unique asset class
Real gold is universally accepted, highly liquid and not owned by banks, making it the perfect form of emergency money. You can trade or sell your gold bars, coins or jewellery anywhere you are around the world.
9. Portfolio Diversification
Diversifying your portfolio means choosing investments that have little or negative correlation to each other. Investors do this to offset potential losses with another asset’s gains. This is why financial advisors will recommend that you hold at least 5-10% of your investments in gold to balance against riskier investments.
10. Gold is an affordable asset
Gold can be expensive, but did you know that you don’t have to have a lot of money to own gold? Typically, you would have to buy whole gold bars, coins or jewellery which can put a big dent in your wallet. Today, financial mobile apps such as HelloGold allow you to buy gold from as little as RM1. This means that you can start small with little financial commitment to own the precious metal.
Would you like to join thousands of gold owners who are already seeing their gold value grow?
Download the HelloGold app and find out more here
Recommend reading: What Are The Risks & Returns On Gold Investments?