The battle is now between fiat currency, gold, and cryptocurrencies. Who will win the battle? Gold came all the way to replace and fix the issues with fiat money. Blockchain technology has powered cryptocurrencies which are now on the verge of replacing gold.
Bitcoin the other day hogged the limelight after its market value got an upsurge of more than one trillion for the first time in Crypto life. It is not all doom and gloom if you are a gold bull. Crypto projects might fail, but gold is still at its best to stand its position. The Coinage Act of 1792 by the U.S congress made it all by setting the Gold standard. The gold standard gave gold the privilege of being the “store value. ” So, investing in gold should not cause a bout of anxiety.
Why is it a good idea to take a “risk” by investing in gold?
- Inflation hedge – during challenging times like the ongoing Covid-19 pandemic, fiat currencies get affected a lot and lose value. Gold will do the opposite; it will rise with the rise of the cost of living. More so with the unpredictable diminishing purchasing power of a local currency. It is suitable for the citizens to take refuge by buying gold which is a store value. This will prevent further losses in unpredictable economic patterns.
- Increasing demand – gold has been intertwined with several cultures globally, which has boosted its demand. China is topping the list of being the world’s best consumers because they have a saving culture in gold. In India, there are peak seasons where gold demand is high. This is during childbirth, marriage, and several cultural practices. This is an assurance of ever-growing demand.
- Portfolio diversification – gold is always negatively correlated to the stock markets. Having gold as an investment allows for a diversified portfolio, which means that there is minimal risk.
- Gold is available at the current market price, not a manipulated price. On the purchase of a gold bond, there are no Goods and Services Tax (GST) chargeable rates or other taxes.
- Gold is a long-term safe-haven asset that should be held instead of government bonds.
When should you invest in gold?
Investment in gold is a market risk scenario, and therefore, do your research well on market variables before making your investment decision. However, there are some situations where you are guaranteed a return on investment. Timing the markets is difficult, but because gold is perceived to be negatively related to equity, if the equity markets are correct – either due to covid-19 or trade wars – gold prices could see a spike. Here the productive times to launch your gold trade:
- Trade wars – trade wars, in most cases, do not involve currency wars but the store values like gold. With the ongoing trade war, investors can do big as gold prices might take an upward trend.
- When there is a lack of confidence in the stock market – when there is uncertainty in stock markets, it is safe to go for gold investment to avoid unnecessary losses.
- Banks are unstable – an imbalance in bank value can adversely affect your savings in the bank. Gold guarantees stability; hence it is worth investing in it.
- The political situation is uncertain – according to London-based precious metals trader Sharps Pixley, politics in Europe, United States, Japan, and other affluent countries will likely result in a bull scenario for gold investors.
- Relentless cyber-attacks – with the rise of online scammers, it is simply safer to invest in gold, which is less vulnerable to cyber-attacks.
In a nutshell, gold is a commodity that investors can rely on when other currencies fail, as it retains its value even during difficult economic times. If you’re looking for more in-depth information on gold investment rules and regulations, check them out here: https://goldinvestmentcoach.com/.
