Amongst increasing living costs and high levels of inflation, one of the last things on our minds might be investing in gold. However, there are some pretty convincing reasons as to why you should.
Capable of transforming Victoria in the gold rush, gold managed to transform the lives of many Australian citizens, providing the highest living standards of all time.
Although a lot of the gold has already been extracted, many believe that is way more out there.
If you’re considering investing in gold, read on.
Why is gold valuable?
How valuable something is, when talking about materials, is normally to do with how difficult it is to obtain. As gold was historically hard to dig out of the ground, it’s been regarded as high value for centuries. In ancient times, gold’s malleability and luster meant it was sought-after by jewellers and even used to make coins.
Years ago, we started using gold to trade, but as time has gone on, there are other methods of trading such as forex and CFD trading that have overtaken gold.
What are the pros and cons of investing in gold?
Like anything in life, there are pros and cons to investing in gold.
Some of the advantages include:
It’s highly valuable – in 2022, gold is set to become more valuable than ever and is set to break its previous record of $2,072.50 per ounce.
It’s a safe investment – Even during Covid-19, gold has remained popular and is seen by many as a reliable, stable asset. Gold remains in high demand and (has since ancient times!), meaning it’s much less likely to experience price falls comparable to that of the stock market.
Its protected against inflation – With most of the world experiencing uncertain economic times and high levels of inflation, gold can protect your wealth. Gold won’t depreciate like a currency, so investing in gold will always lead to retention or an increase in value. Unlike bank accounts where money can be rendered worthless, gold can be a savvy backup.
It’s simple to get started – Unlike stocks and shares that require a lot of knowledge, you can get started by simply buying your first ounce of gold.
Disadvantages of investing in gold:
It can be difficult to store – As gold is so valuable, it means that it’s often the target of theft. As such, finding out how to store your gold is crucial. You must also authenticate your gold when you buy and sell it, meaning it can be a lengthy process.
It’s not as easy to release income – You can only yield a return on investment when you sell gold, so it’s not as easy as a stock or share that will pay dividends.
Lower capital gains – Although gold is highly lucrative, it is unlikely to give you as substantial of a gain compared to stocks, shares, or property. On the other hand, gold is experiencing a boom currently, so you could be in luck.