5 Reasons to Invest
in Gold in Australia
Throughout the ages, gold has remained a valuable asset. Not only has it been used for ornamentation, but it has also been used as a medium of exchange. While gold isn’t minted into coins and used to purchase goods directly anymore, it is still an esteemed commodity and storehouse of wealth. Today, we will discuss 5 reasons to invest in gold in Australia.
Reason 1: Gold Will Always Have Value
Today’s fiat currencies used in several countries are volatile in nature. They have no intrinsic value which makes them susceptible to devaluation and eventual collapse if economic extreme duress occurs and if the people loses confidence in it.
On the other hand, as a commodity, gold will always have value. It cannot default nor can it go bankrupt which makes it an excellent safe haven against fluctuations in the financial market and even economic disturbances.
Reason 2: Gold is a Good Hedge for Your Portfolio
Gold is an excellent diversifying investment since it has consistently shown low to negative correlations with other assets. If you include this precious metal in your portfolio, you’re likely to improve its efficiency in terms of higher reward-to-risk ratio over longer periods.
In fact according to the largest hedge fund in the world, Bridgewater Associates LP, if you want to be smart in your investments then you should hold 5 to 10 percent of your portfolio in gold to hedge against political risk.
In an interview with the Business Insider, the founder of Bridgewater Associates, Ray Dalio explained that, “…the best way to structure a portfolio is to have the right kind of balance in your portfolio, and some amount of gold. Gold serves a purpose. It is first of all, a diversifier against other assets.”
Reason 3: Gold has a Limited Supply
Gold is a finite resource. While there had been gold rush eras in various parts of the world including Australia in 1851, there hasn’t been enough significant gold mines discovered in the last decade.
Since there is a limited supply of gold, its price is likely to rise in the coming years as demand for it increases as well. If you’re looking for a long-term investment that is highly liquid then gold is the best choice for you.
Reason 4: Gold Retains Its Purchasing Power
People have traditionally invested in gold as a hedge against inflation and for good reason. Unlike fiat currencies whose value is highly affected by inflation, gold’s value remains stable. While it is true that the price of gold is affected by economic conditions, its purchasing power remains stable, particularly in the long-term.
Reason 5: Gold is a Universal Currency
Gold has been around for centuries and it has been historically used as a medium of exchange for goods and services by many civilisations. Today, it remains a recognised and tradable currency worldwide despite not being used to back fiat currencies as widely as before.
Wherever you go in the world, having gold means having money which means your wealth is not tied to standard fiat currencies.
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