Reasons to Trade Gold

Fortunately, investing in gold isn’t an option available only to governments and financial institutions; it’s a viable option for private investors worldwide who are looking to take advantage of this safe haven asset. If you’re still on the fence about the benefits of trading this precious metal, consider the following top five reasons to buy gold.

1 – Inflation protection. The cost of gold tends to rise as the cost of living rises, which means that it’s essentially inflation-proof. If you take a quick glance at the history of the US stock market, you’ll see that in the times of the highest inflation, the Dow Jones Industrial Average has plummeted, while the cost of gold remained stable, if not higher than usual. Consequently, anyone worried about how inflation will affect the return on their investments should consider investing in gold.

2 – It helps diversify your investment portfolio. Any respectable financial advisor will tell you that it’s vital to have a diverse list of assets within your investment portfolio. Though many people think that diversity counts only when it’s a mix of stocks, bonds, CFDs or currencies, gold is an excellent way to add a new dimension to your trading portfolio, and to add a bit of stability even in a risky portfolio.

3 – Gold is immune to geopolitical crises. Though currency values and stock prices tend to fluctuate based upon the political climate of a country at any given time, gold tends to resist such dramatic price swings which makes it a solid choice for anyone concerned that their own currency may be at risk or who are concerned that their own currency may be devalued for any reason when they need it most.

4 – Limited production increases the value. Unlike the case of currencies, where government leaders can opt to bring more money into production almost instantly, gold production is a rather laborious process, one that can take years to develop. For this reason, every few years there tends to come a time when the demand outpaces the availability, causing gold prices to spike.

5 – It has a history. Even a cursory glance at market trends will show that all currencies at some point or another fell significantly in price – and that global stock markets have plummeted as well. Gold, however, is a metal that has maintained its value for millennia. Gold has been noted as valuable since Biblical times, and remains so until this day. Although the price doesn’t always increase, gold has never experienced the long-term fall from grace suffered by all other major currencies throughout history, including the almighty US dollar.

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