Gold has been sought after for its unique blend of near indestructibility, beauty, rarity and because of its status as a means of exchange and universal currency par excellence for centuries.
Empires and nations have sought to possess gold as a medium of international exchange, as a store of wealth and in order to increase and preserve power.
Individuals have used gold as a store of wealth and as insurance against the fluctuations and depreciation of paper money and to protect against other macroeconomic, systemic, geopolitical and monetary risks.
Throughout history, perhaps no other asset in the world has had the universal appeal of gold and this appeal has increased in recent times due to the very significant macroeconomic, systemic, geopolitical and monetary risks facing our modern global financial system and economy.
Successful investing is about the diversification and management of risk. In layman’s terms, this means not having all your eggs in one basket. We know from history that markets can and do crash and if you are not properly diversified your nest egg can be severely affected.
The key is to determine what amount of each asset class to have and to own assets that will weather the onslaught of inflation, deflation, stagflation and even hyperinflation.
Some exposure to gold should be included in all diversified portfolios. A good rule of thumb would be a minimum allocation of around 10% to gold and related gold investments.
One’s motivation for buying gold is fundamental to deciding in which form you should buy it.
- Are you a speculator, investor or saver?
- Do you wish to take a short-term speculative position in gold?
- Are you investing for the short, medium or long term?
- Or are you diversifying, saving or using gold as a form of financial insurance?
Article courtesy of A comprehensive guide to Investing in Gold by GoldCore
