For ages, gold has been considered a precious yellow metal, admired worldwide for its shine and magnificence. The first gold coins appeared around 640 B.C., and the first genuine gold coins entered the market nearly a century later during the reign of King Croesus of Lydia. In India, gold is not only a valuable metal but also carries deep emotional significance. Whether it’s a wedding, anniversary, birth, death, or any other occasion, gold holds a special place in almost everyone’s life. Among all other things, a gift of gold is considered not only auspicious but also worthwhile. So lets talk about major benefits of investing in gold, we have listed all beneficial points below.
Not from a monetary perspective, gold certainly carries an edge over others. In times of financial emergency, people have an option to sell their gold to get quick money. They can even put it on lease to procure the funds and repay the amount to get back the jewelry. But this is from a layman’s point of view. From an investment perspective, gold is considered a valuable asset for several reasons. With its consistently rising prices, investing in gold is likely to result in an increase in its value over time.This is what makes gold the most sought-after metal among investors.
Various gold rate prediction reports expect a great increase in the price of the metal. So, if you are looking to buy gold, you must need to know all the major benefits of investing in gold. Here they are:
Protection against inflation
This is certainly one of the biggest benefits of gold investment. In the case of rising inflation, the worth of a currency takes a dive. Over a period of time, nearly all leading currencies have faced a decrease in their worth in comparison to gold. Thus, people have been found to hold money in the form of gold. In scenarios when inflation remains high, particularly when it is in high double digits, prolonged in the economy, gold provides a verge against inflationary scenarios.
Easy liquidity
In times of a financial emergency, investments in gold can be honored much quicker than other tangible assets even better than real estate. Contrary to several other types of assets, there is no lock-in time period in gold investments excluding sovereign gold bonds. The redemption value in case of physical gold will, though, depend on the cleanliness of the gold, quantity and other aspects including the market price.
If you have paper gold, the market value on the redemption date regulates the redemption value. People can opt for gold against loans in case of financially weaker scenarios.
Enables portfolio diversification
According to the top 10 stock brokers in India, gold is widely regarded as an effective portfolio diversifier due to its low to negligible correlation with major asset categories. Despite this, it exhibits no statistically significant association with mainstream assets.
Some experts also note that evidence suggests gold can behave inversely to equities during periods of market stress. In other words, when stock prices decline sharply, gold often moves in the opposite direction. This characteristic makes gold a reliable hedge, as macroeconomic and microeconomic factors that impact most asset classes typically have little effect on its value. By including gold in a portfolio, investors can potentially reduce overall risk or volatility for certain return levels.
Tangible asset
No matter whether you invest in FDs or stocks, tangibility is always an issue. However, that is not the case with gold which is a tangible asset. The high level of tangibility gives a kind of assurance to investors. Moreover, buying gold is a lot easier in comparison to buying other tangible assets such as real estate. Moreover, due to this feature, while assets stowed digitally are susceptible to hacking and other misapplication, gold stays away from such concerns. However, it does come with its own threats. So, be wary of them.
Conclusion
Though gold is considered a safest and valuable investment asset for investors, it is necessary for them to be aware of both pluses and minuses of investing in gold. So, do proper market research before investing in the yellow metal. Also, keep a check on the latest gold rate prediction for better decision-making.