There are many reasons for investing in gold today.
Safe haven
Gold has proven to be an excellent safe haven during crises no matter how short or long the crisis’ duration was. Even if the next crisis cannot be predicted or foreseen, gold will still hold strong. But today, many “black swans” have surfaced in just the last two years, making the markets susceptible to the beck and call of such events. Hence, gold is appreciated as a short-term hedge against an unstable economy.
As for a longer term effect, gold gains its owners confidence in view of increasing inflation; speculative or not as many signs point to its imminent presence. Global governments are still wrestling with debt issues with their central banks intervening for a plausible solution which is nowhere in sight; this will definitely spiral down the major currencies’ value quickly. Hence, a wise choice to resort to gold as a definite hedge against inflation is obvious.
Possible reserve currency
As the economy leaves little confidence, it is time to consider an alternative reserve currency: gold. And this could very well happen over the long run. Gold has been used as the global reserve currency throughout history; it could rise again to regain its prominence as a reserve currency.
This could happen sooner than expected with the central banks buying up gold like sponge soaking up water. Their new found interest will spark a greater demand on gold. Just holding on to their current supply will stir renewed interest in the precious metal of all sorts.
Diversified portfolio
Owning gold has many caveats; investors have understood it enough to incorporate gold into their portfolios, embracing its risks as well. Gold’s volatility is infamous on the market front; its ballooning price today holds excitement for some and grave concern for others.
Increasing Trend
Gold prices have been on the rise for a decade and there is no indication of it halting or reversing any time soon. Hence, many are optimistic about the continual rise of its prices. It is believed that gold prices have not become full-blown as yet with a current $1,600 per ounce.
Many investors and analysts are watching and waiting to see it rise to $2,000 per ounce due to inflation.
Gold has always incited a love/hate relationship. It is a contrary investment. Some still eye it suspiciously while those who embraced it earlier are smiling today.
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