Why You Should (or Shouldn’t) Invest in Gold

I have written enough about gold investment. ‘Gold is good’, ‘Gold can bean inflation’, ‘It’s a good investment to diversify your investment’. So, why do I write it over and over again? Because the value of gold changes over time, with change in related factors, and the effect should be visible in your portfolio.

The current situation, however, is quite different. People who had invested in gold few years ago are receiving great returns. However, due to elevated prices, it’s very expensive to own gold now. For instance, current price of gold per ounce is 300% more than it was 10 years ago, and it was all time high in December at 1,226.56.

In recent years, billions of dollars have flowed into this investment product, as every investor wanted to be a part of this rally. And, as ever, gold is considered to be a an investment that hedges you against inflation.

Since gold prices are at its peak, many aren’t planning to add it in their portfolio, simply because it would take a long time to double the investment. Besides, when a product’s price is at peak, there is a constant fear the prices might go down, keeping the short term investors from buying product.

However, for people who intend to design an investment portfolio with a long term view in mind, I would suggest them to invest at east 10% of their money into gold. The gold market, unlike stock market, has never seen a major decline when we compare it on year-to-year basis. If the price is $1,000 per ounce today, it would certainly be higher in June next year.

Besides, profits should not be the only intention when you designing a safe, strategic portfolio. Gold adds value to your investment, along with diversifying it broadly. You invest money in stocks, bonds, and mutual funds, and term your investment as ‘diversified’. However, they belong to the same category, and when the economy collapses, you realize you have made a grave error.

This is, however, not the case with gold. Even if the economy of a country collapses, the prices wouldn’t be affected much as the gold market is not driven by socioeconomic conditions of a country. Also, it has been noticed that when the stock market collapses, gold prices are at its peak, hedging your investment.

In conclusion, I would encourage investors to put money into gold at any time, regardless of its spot price.