Gold is a valuable commodity and it has retained its status for a long time. Gold buyers will own gold in various forms as a financial asset and a store of wealth. The precious metal is one of the safest investments since it has always been seen as the safest asset. Its value is protected in times of economic turmoil and other geopolitical issues.
Most physical gold comes in the form of jewellery, coins, and bars. Jewellery however is not made with the highest purity and isn’t regarded as gold bullion. Most investors will buy the purest gold bullion coins or bars because they sell well in uncertain market conditions. Gold is known to withstand market volatility, inflation, and other factors that can have an impact on economic growth. The demand for the metal goes high in times of turmoil.
Gold against inflation
Inflation is a major risk that people are facing these days. Inflation can be described as the gradual increase in the cost of living. In the last twelve months, inflation has gone up higher hitting almost 8%. This is the highest inflation has been in over 40 years and there is very little indication that this is about to go down.
Inflation is not good for the money. When inflation increases, the value of money also decreases. This means in the future you will need more money to buy the same goods you are paying for now.
Gold has always been a hedge against rising inflation. In fact, unlike the currency, the value of gold increases with the increase in inflation.
Gold is a good investment portfolio diversifier
Gold is not correlated with other assets like stocks and bonds. These are more sensitive to the volatility of the market. Traditional assets lose their value in sensitive markets but gold shines in these experiences.
Depending on what is happening in the markets, some stocks perform better than others and can fluctuate greatly however when you have gold, your portfolio has an asset that is stable regardless of what the economy is doing. Gold acts as a stabilizer because its value isn’t affected by the upward and downward swings of the stock market.
When the U.S. dollar gets weaker
The U.S dollar is used as the reserve currency across the globe, however, several factors contribute to the weakening of the dollar. The strength of the dollar also depends on what the Federal Reserve Bank decides. It can decide to lower its interest rates which is something that can encourage people to borrow more money. If the dollar is easily available then its value depreciates. So, if the government decides to print more currency then the result may be a depreciation of that currency which is good for gold.
Gold is a scarce commodity that is in high demand. It is a scarce precious metal that will continue to be valued and used in a variety of industries. If the demand continues to go up, so will the value of gold.
As a gold bullion buyer, it might be helpful to keep up with the trends to understand how the value of gold may change. Gold reached its peak reaching levels above $2,000 in 202. The value experienced some volatility when the COVID-19 pandemic raged on. Today, it is also going through some uncertain times because of the Russia/ Ukraine conflict. As the war rages, we should prepare ourselves for a lot of market upheavals.