Benefits of investing in gold in 2023

Americans have had a lot to deal with when it comes to their finances this year. From still-high prices to elevated interest rates and continued concerns over a looming recession, choosing the best place to secure your money for the long-term is a challenge.

At the same time, more Americans are growing interested in gold as an investment option in 2023. It's not hard to see why: Gold prices have surged this year and gold's reputation as a safe store of value can have a lot of appeal in today's economy.

If you're interested in adding gold to your investment portfolio, it's useful to know the benefits of the precious metal, and how it may help you reach your financial goals today.

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Benefits of gold investing in 2023

Here are some ways gold may be a good resource to help you reach your investment goals this year:

To hedge inflation

Inflation may have come down from its near-9% high last year, but the inflation rate is still far from the Federal Reserve's 2% target. The latest Consumer Price Index reported that inflation was still up by 4% year-over-year in May — and you may still be feeling the pinch in everything from housing costs to food and travel.

As an investment, gold can be a safe haven during periods of inflation. Historically, its price tends to rise when inflation pushes down the value of the dollar. That's because as the value of the dollar goes down, more people seek out gold's stability, in turn helping its price rise. 

Perhaps the most commonly cited example occurred in the 1970s. Inflation during the decade ranged from just under 3% in 1972 to more than 13% by the end of 1979. Over the same period, gold prices surged from about $50 per ounce to nearly $500, according to data from the World Gold Council.

Considering gold as an inflation hedge in today's economic environment? Use this free investors kit to explore your options.

To diversify

One of the best ways to reap the benefits of gold is by using it as a diversifier for your other long-term investments.

"Commodities, including gold, act as good diversification tools," says Gregory Young, CFP, founder of Ahead Full Wealth Management. While relying on equities is the best path to growth, he says, you can see added growth by "incorporating thoughtful diversifying positions."

That's why many experts recommend dedicating only about 5% to 10% of your portfolio to gold. With a smaller allocation, you can allow traditional investments like stocks to grow over time. But during periods of market downturn, gold can help you offset losses to keep your portfolio's value stable. Especially this year, as the possibility of a recession remains concerning, investing in gold may be a good way to weather any coming uncertainty.

"Of the many precious metals, I would prefer gold because it has had the best growth and behaved the least erratically," Young says.

To maintain liquidity

Liquidity is one benefit of gold that may not be top of mind in the same way as its inflationary and diversification benefits are. 

Gold is a good alternative to preserve value and hedge inflation, agrees Ohan Kayikchyan, CFP, founder of Ohan the Money Doctor. "Plus, it has decent liquidity: the ability to turn into cash quickly." 

Gold isn't only an investment asset, but it's also a form of currency — and has been for thousands of years. Its value is recognized globally, and the precious metal can be bought and sold at any time. In fact, gold spot prices can help you realize the value of your gold investment whenever you'd like. This liquidity helps gold remain a reliable, stable store of value within your portfolio. As a finite resource with value across the world, you can rest assured of your gold investment.

Find out more about how you can begin investing in gold today with a free investment guide.

The bottom line

In a year defined by ongoing economic uncertainty, gold may best benefit you with its stability. While its price has increased in value this year — even reaching near all-time highs a couple months ago — it's also shown stability in the face of volatility in other markets. Whether you're looking for a hedge against ongoing inflation, a way to diversify your portfolio while still allowing traditional assets to grow or added liquidity with historical value, gold could be worth considering.

Still deciding if a gold investment is right for you? Speak with an expert to learn more about your options and how gold might fit your long-term investment plan.