Gold is probably the oldest form of investment around the world. Households from Europe, Asia, and the United States still prefer buying gold. It’s considered as an item that offers protection during bad times and is an excellent passive investment. Gold is traded as a commodity that can be easily purchased and sold anywhere in the world.
In spite of this, these days gold is often looked at as a second investment option. Of course, others like stocks, bonds, and cryptocurrencies are considered as primary options. Let’s take a look at some points to see if gold can really offer value for money in this era of digital currencies.
Lesser interest on the investment
Individuals looking forward to saving something for the bad time can look at gold and invest for a short time. However, the precious metal may not prove to be the best option for professional investors who are looking for healthy returns. Compared to other forms of investment, gold’s returns can prove to be lesser.
Gold cannot offer returns more than a certain percentage as it is a commodity that does not contribute towards growth. Such is not the case when it comes to deposits, bonds, or shares. The precious metal’s value in the market can increase drastically only in case if the demand grows due to some or the other reason. To put it in simple words, gold is often purchased with a hope that someone else would buy it at a higher rate in the future.
Gold is used in specific electronic items and also for other industrial applications. But the amount used is not sufficient enough to trigger drastic price hike even if gold supply is reduced. So, if you buy gold worth $10,000 and sell it after few months, you may not get more than $10,000 at all. On the other hand, if you choose the stock market or cryptocurrencies for six to eight months, you might end up making $5000 more on your initial investment of $10,000. Again, risk factors involved in such investments are hundred times greater compared to investing in gold.
Value remains intact even during difficult times
Bitcoins are often said to be the next generation’s gold and financial analysts urge people to invest in various cryptocurrencies to get assured returns within a short period. But, the world witnessed how Bitcoin as well as other popular cryptocurrencies lost their value and regained most of it between December and February this year. This volatility proved that digital currency might not prove to be as good as gold at times.
Gold can prove to be the perfect investment tool for investors who live in countries that do not have access to financial markets. And of course, for those investors who do not have much of knowledge about stocks markets and cryptocurrencies. For others, gold should be considered as a secondary investment option.
History is evident that gold manages to survive even when paper currencies lose all their value.
The precious metal can prove to be an excellent alternative to currency for investors who live in countries that have lost their official currency’s value during the last few years. Take Venezuela for example, the country’s currency Venezuelan Bolivar has almost lost all of its value. So, people living in such nations can definitely do better with the precious metal instead of saving money in the form of cash. Countries that use more of digital currencies or face demonetization very often can surely get the best out of gold.
If at a later point, developed countries come up with regulations for cryptocurrencies, investors might be forced to pay additional taxes. But, gold would undoubtedly remain safe from such additional burden of taxes.
Acceptance ratio is better than cryptocurrencies
In case of urgency, you can easily visit any nearby pawn shop and sell your gold to get cash on an urgent basis. Unfortunately, this may not be the case when it comes to selling bonds, stocks, cryptocurrencies, and other commodities.
Gold is also used to store wealth in the form that does not attract taxes. On the other hand, you may not be able to save anything when it comes to fees and other charges that apply to various forms of investments.
Gold can prove to be the best bet during uncertainty in the global markets
During his recent interaction with CNBC, analyst Josh Saul pointed out that even Brits are pulling their investments out of European countries and are investing in gold. The precious metal can help them stay away from side-effects of Brexit.
Same is the case in the US. Due to possible trade war triggered by Trump’s tariff on cheap imports, the IT and Metal stocks are not considered safe. Cryptocurrencies are showing a lot of volatility, so, people prefer the old school way of investment, gold!
Buy gold in paper form if you don’t want to own it physically
Buying the significant amount of physical gold and storing the same at a safe location may not be possible for everyone. So, there are other alternatives like gold bonds, gold-backed mutual funds, as well as gold CFD (Contract for Differences) instruments.
You can actually increase your returns by investing in gold mutual funds instead of buying the metal in physical form. If you opt for CFDs in gold, you can even make money by speculating about ups and downs in gold prices.
Now, you might wonder how to find the best platform for CFDs trading? The answer is simple; go for a platform that allows you to deal in gold CFD, cryptocurrency CFDs, as well as commodities, shares, bonds, indices, etc. using the same software.
Overall, history is evident that gold’s value (in various forms) is a social construct and enjoys a high level of acceptance compared to other investment options in spite of its negative sides. Its return may be lower than other options, but its value faces lesser volatility in various markets around the globe.