Gold – Why You Should Own It

Gold – Why You Should Own It

Gold Is Money

Gold is not used as a currency today, but its role as money makes it superior to any currency.
In fact, gold has been money longer than any currency in history. Gold has been a store of value for at least 5,000 years, while one of the longest currencies in history, the British Pound Sterling, is about 1,200 years old.

One of the crucial promises of money is that it serves as a long-term store of value. Gold fulfils this promise better than any currency.

There were periods wherein the short-term currencies grew in value more than gold, but over the long-term, the rich have always held it in their investment portfolio.

Gold Cannot Go Bankrupt!

If you hold gold, no paper contract is needed to make it whole. No middleman or other party is necessary to fulfil a contractual obligation.

That’s because gold is the only financial asset that is not simultaneously some other entity’s liability.

This is important because gold will be the last man standing when bubbles pop or a crisis hits. That’s a powerful tool to have in your portfolio when things start to go wrong in your country or economy.

It also means gold won’t go to zero. It’s never happened in its 5,000+ year history.

Gold will always have value. You can always sell it if you need currency.

Gold Can Act as an Inflation Hedge

The hedge against inflation is the traditional motive behind the investment in gold. The yellow metal serves as an inflation hedge in the long run.

When inflation rises, the value of currency goes down. Over the long-term, almost all major currencies have depreciated in value relative to gold.

But gold prices have doubled over the last five years and quadrupled in a decade.

In a country like India, where every saving instrument may not provide returns, gold fares well when the inflation rate exceeds the interest rate.

Likewise, the annualised return of gold over ten years has been way higher than that of inflation. What this means is that gold has given individuals a real rate of return.

Gold is a Tangible Asset

Gold is one of the few assets that is tangible, and thus, it creates a perception of safety among investors.

Purchasing gold is much easier compared to purchasing other tangible assets such as real estate.

Also, because of this feature, while assets stored digitally are prone to hacking and other misuse, gold is free from such concerns.

However, it does come with its own risks. So, be mindful of them.

Gold is Highly Liquid

Gold is also ideal because it is easy to sell and can be carried in your pocket anywhere you go.

Gold is highly liquid. Virtually any jewellery dealer in the world will recognise gold and buy it from you. You can sell it to your local coin shop, a pawn shop, a private party or an online dealer. It can always be sold for cash or traded for goods.

The process is frequently quicker than selling a stock in your brokerage account.

Other collectables, like artwork, could take longer to sell, have a smaller customer base and would likely entail a big commission. But with gold, you can get cash or goods in hand on the spot with no hoops to jump through.

This liquidity means you can take gold with you literally anywhere in the world. If you’re uncomfortable crossing a border with it, you can buy gold you can transport.

Gold Requires No Specialised Knowledge

Can you spot a real diamond?

Can you look at two paintings and tell which one is the fake?

Can you pick stocks or invest in other financial securities of your own knowledge alone?

Gold requires none of this. No special skills, training or equipment are needed to buy or recognise gold.

Unlike bonds or real-estates, among a series of other investments, gold requires no specialised skills. All you need to do is simply buy and store your gold.

There are no tedious charts to compare all day long, or trading bots to trust with your portfolio.

Buying gold is relatively straightforward.

Gold Can Be Your Saviour 

One of gold’s strongest advantages is that it can protect your portfolio, even your standard of living, during periods of economic, monetary or geopolitical crisis. Depending on the nature of the crisis, gold can move from a defensive tool to an offensive profit machine.

Many people use gold in times of financial distress.

The Indian Government itself airlifted national gold reserves to pledge to the International Monetary Fund (IMF) in the early 1990s, to cover the balance of payment debts.

Households also sell or pledge the precious metal in times of financial distress. It is a refuge in times of trouble.

 Portfolio Diversification

It is believed by some economists that gold is a highly effective portfolio diversifier due to its low to negative correlation with all other major asset classes.

However, some suggest that there is evidence that when equities are under stress, in other words, when shares are falling rapidly in value, an inverse correlation can develop between gold and equities.

Gold protects one’s portfolio from volatility because the factors, both at the macro-economic and micro-economic fronts that affect the returns of most asset classes do not significantly influence the price of gold.

For a given level of returns from a portfolio, the risk or volatility can be reduced by adding gold to it.

Risk-Reduction and Wealth Creation can be Achieved With Gold

Gold offers dual benefits of risk-reduction and wealth creation.

Even if there is no economic crisis or geopolitical tensions, the precious metal can still give decent returns in the long-term.

Its past track record has already proven that. In case there is an economic or political shock, gold provides the perfect hedge against capital losses from equities.

Gold Absorbs any Jitters or Value-erosion in a Country’s Currency

In case the local currency of an economy sees any major fall owing to macro-economic factors, gold provides owners with a cushion.

When India’s currency remained under acute pressure in 2013-2014, all major global currencies still managed to support gold price in rupee terms.


Gold’s qualities make it one of the most coveted metals in the world and a popular gift in the form of jewellery.

The decline of paper investment leads to increase in the price of gold and hence gold is perfect if you wish to diversify your portfolio.

In the short term, the gold prices can be volatile, but it has maintained its value over the long term. If you are planning on acquiring gold, make sure it is for a long term.

Acquiring physical gold is worth considering …..

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