Gold is a timeless investment. For thousands of years, it has been prized for its rarity, its beauty and its intrinsic value.
Gold is Rare While many commodities have been experiencing bull markets for the past few years, most other rocks and minerals are plentiful. At a given price, the supply of copper, coal, or iron ore can be increased. With gold, higher prices certainly lead to increased mining activity, but those efforts may or may not yield additional production. Looking at global production over the past 10 years shows essentially no production increase, even in the past several years of rising gold prices.
When political, social or financial turmoil prevails, people tend to seek more reliable investment vehicles such as gold. Tracking the recent history of gold shows that in times of world crisis—such as the Vietnam war and Watergate scandal leading to the resignation of President Nixon—the average gold price continually went up from its low $40 starting price to well over $100 in just two years.
As wise investors know, diversifying your portfolio protects you from the fluctuations of any one particular asset class. Gold provides a stabilizing influence because it is not affected by the same economic forces that influence most financial assets. Allocating a portion of your portfolio has been proven to significantly improve the performance of your portfolio during both stable and unstable economic times. As the graph below illustrates, gold returns move in opposition to stocks.
In many cultures, gold is valued as a family heirloom and passed down for generations. Gold bullion coins make excellent gifts as they can be appreciated as much for their beauty and mystery as for their intrinsic value. Because of the wide array of sizes and choices available, giving the gift of gold can be easy and affordable for anyone.
Unlike stocks or bonds which can only be traded during Wall Street hours, gold can be readily bought and sold 24 hours a day. Holding some of your portfolio in gold can prove to be a wise choice during times when cash is essential.
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