Gold has been considered a store of value and safe haven asset for centuries. With economic and geopolitical uncertainty on the rise, many investors are turning to gold as a way to diversify their portfolios. Gold can provide portfolio protection against inflation, currency debasement, and systemic risks. This article explores 10 compelling reasons why gold deserves a place in most investment portfolios.
Gold provides protection against inflation and currency devaluation
As a real asset with inherent value, gold has historically held its purchasing power over long periods of time. With central banks printing money at record levels, inflationary pressures are building. Gold offers the potential to preserve wealth as paper currencies decline in value.
Gold acts as an equity market hedge during periods of crisis
Investor portfolios are often overexposed to volatile equity markets. Gold has a negative correlation to stocks, meaning it tends to rise when equities fall. This was evident during the 2008 financial crisis when gold prices rallied while stocks plummeted.
Global demand for gold is increasing steadily
From central banks to individual investors, gold demand has been remarkably strong and diverse. Central banks are net buyers of gold as they look to diversify away from US dollar-denominated assets. Meanwhile rising middle classes in emerging markets are buying more gold jewelry.
With its role as a safe haven asset and inflation hedge, gold deserves serious consideration for any diversified investment portfolio seeking safety and stability. In an uncertain world, the enduring qualities of gold are more relevant than ever.