Before I present you with the benefits of investing in gold, I should provide a little backstory. Gold once held a very significant role in the world's monetary system. Currencies throughout the world required their money to be backed by metals, which lead gold to be seen as a symbol of wealth. The United States' government once held a gold standard requiring the U.S. dollar's value to be based on a certain weight of gold. With this standard, the amount of money an individual held signified how much gold or silver they stored in a bank. While currencies are no longer backed by gold, the metal still holds intrinsic value that individuals can benefit from today.
Major Banks Secretly Invest in Gold
Maybe it's not a secret, but not a lot of people are aware that major banks have precious metals reserves. If investing in gold didn't hold any value, why would banks, such as JP Morgan, have an active interest in precious metals markets? The answer is simple, gold is important to the global economy.Gold Protects You Against a Declining Dollar
For some reason, people don't want to believe that the value of the U.S. dollar is depreciating. Yes, it's an important currency in the global economy, but it hasn't been the same since the last market crash. For this reason, many people begin investing in gold. They put their dollars into a commodity that hold more value in the long run, mostly precious metals.Gold Holds Up During Inflationary Times
Inflation is terrible for the economy. However, it's great for gold investors. The yellow metal tends to appreciate during these hard times. Again, as soon as investors realize their precious dollar is losing value, they go straight to investing in gold. This increases demand for the metal and it suddenly becomes more valuable.Political and Economic Uncertainty Makes Gold a Safe Haven Bid
All of this flocking towards the yellow metal during uncertain times makes gold a safe haven investment. This means that people believe investing in gold will help them protect their wealth. Depending on how bad a political or economic situation gets, gold can even be used to barter or trade. If you don't believe that investors flock to gold during hard times, just keep an eye at the news and the markets. When the news begin to headline political or economic turmoil, the precious metals market starts to experience some movement.Gold will Diversify Your Portfolio
No one is asking you to fill your entire investment portfolio with precious metals. Holding a little bit of gold with your stocks and bonds is a great way to reduce risk and volatility. Let's think rationally for a moment. If your portfolio holds stocks for a particular company whose CEO is suddenly detained for embezzling, do you think that those stocks are going to hold the same value as they did before the CEO was caught? No, and if you don't have precious metals in your portfolio you've just lost a great deal of money. Conversely, if you do have gold in your portfolio, you better believe you're sitting pretty because news like that will have people flocking to gold in no time.Protect Your Wealth with Gold
All of these great benefits to investing in gold all point to protecting your wealth. That's really what it comes down to. History shows that gold is stable in times of crises and that's going to matter when the dollar depreciates. The best way to protect the wealth you've worked so hard to build is by preserving it in a commodity with intrinsic value.I won't deny that gold is a volatile commodity to invest in, but that's only in the short term. The real value lies in the fact that the precious metal maintains its worth in the long run. Consider investing in gold. Start out small, but diversify your portfolio with a little yellow metal.
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