If you’re considering gold as an investment, you’ve come to the right place.
Gold is a precious metal that has been around since the times of the Byzantine (nearly 1,500 years ago!). For centuries it was considered a universal currency, and the safest way to store money. At one point every pound and bank note in the UK was connected to a specific amount of gold, meaning it was the primary form of currency until the year 1931 when the Bank of England decided to take the pound off the gold standard.
But how about now? Is it wise to invest in gold? What are the main advantages? There are many advantages to gold, however it’s important to note that those advantages only come with buying physical gold – buying gold stocks and other paper forms at the end of the day is not much investing in a normal currency.
At Minted, our mission is to make gold accessible to everyone. We’ve put together five advantages of adding gold to your portfolio.
1. It’s tangible and holds value
The pretty amazing thing about gold is that you can hold it in your hand. You can feel it. You can touch it. It can’t be destroyed by fire, it doesn’t need feeding and no maintenance is necessary. It can’t be hacked either, and it cannot disappear with just the click of a mouse. If tomorrow the internet crashes, your gold will still be there waiting for you.
There’s also a finite amount of gold in the world which means it has an inherent value, something which it has successfully maintained throughout the centuries. This is quite different to coins and paper currency, which has a history of fluctuation. The fact is, gold is still a prime way of passing on wealth from one generation to another.
2. It’s easily liquidated
Whether you’re on holiday in Thailand, travelling through Mexico or visiting the Mona Lisa, you’ll always be able to convert your gold into cash. Bullion dealers around the world know and recognise the value of gold, which means you can easily sell at your local pawn shop or coin shop. And if you’re in a hurry, exchanging gold for cash is usually faster than selling stock: bring in your gold, and you’ll get the cash that same day. With stocks? It could take from 3 days to a week. And let’s not get started if you’re trying to sell collectibles!
3. It’s a hedge against inflation
In times of little to no interest rates, the money that sits in our bank account is slowly losing value every year. By investing in gold, you are essentially building a hedge against inflation by storing something that keeps its value.
When inflation increases, the Sterling pound loses purchasing power. Since gold bars are priced in GBP, the gold’s value increases in value at the same time. For this reason, gold offers a more stable investment than stocks, cash and other commodities in the long run.
4. It diversifies your portfolio
Diversification is key in order to keep a balanced portfolio that stays stable during difficult times. Gold is an essential part of diversification since, historically, gold increases in value when stocks and bonds decrease in value. You just need to take a look at previous financial crises to check: in 2008 crisis stocks decreased by 20%, whereas gold increased by over 30% during the recovery in 2011. In the 1973, gold was doing great with a 73.49% annual change, while stocks and bonds were crashing.
Gold as an investment may be volatile in the short term, but in the long term it has always maintained its value. By combining your portfolio with gold, you help protect your investments by reducing uncertainty and risk.
5. It’s simple to buy
Do you know how to read a balance sheet? Understand a PE ratio? Or differentiate a fake Monet from a real one? We’re too busy with our own lives to become the next expert in diamonds or stock market trading.
With gold, no expertise is needed. You don’t need equipment, training or specialised skills. And now with gold investment companies and apps such as Minted, buying gold is only one tap away and it won’t cost you an arm and a leg.
When the stock market crashes and currencies lose value, everyone rushes to buy gold and the prices increase. Gold is that investment that will keep your portfolio stable, will hedge you against inflation and will sell for cash if needed (no matter the country!) By investing in gold, you’re protecting your assets and your future.