Does investing in gold still pay off?
Gold has been in the headlines a lot this year. Amid ongoing economic uncertainty and worrisome financial news, many investors have turned to the precious metal to protect their wealth and add some stability to their portfolios. The increased demand has driven up prices to levels approaching near-record highs earlier this year.
After the Fed's recent rate pause, gold prices and futures dipped slightly, but they still remain around $2,000. And with the Fed signaling two more rate hikes for later iin 2023, it's anyone's (educated) guess where gold will go from here. Many experts predict prices will rise again, but some foresee them holding steady for the time being.
With all this in mind, investors may be wondering if gold is still a wise investment. In this article, we'll explore the factors to consider and what they mean for your decision to invest in gold. Learn more about gold investing today with a free information kit.
Does investing in gold still pay off?
To answer this question, it's necessary first to understand the overall benefits gold offers as an investment.
Stable returns despite economic turbulence
One of the main advantages of investing in gold is that it's been proven to deliver steady long-term returns despite periods of economic uncertainty. During market downturns and geopolitical turmoil, gold tends to hold its value or even increase, making it a good way to add safety to any investment portfolio.
"During times of economic and political instability, gold is often seen as a safe-haven asset and has historically done very well during crises," says Doug Carey, CFA, president and owner of WealthTrace. "If you anticipate increased volatility or uncertainty, gold is a good hedge. Given how uncertain many things are in the world today, gold has a place in most portfolios as insurance against calamity."
Hedge against inflation
Inflation takes a toll on other assets, such as stocks and bonds. The value of the dollar also declines. Gold, on the other hand, regularly shines in inflationary periods. For example, when inflation reached double digits in the 1970s, gold prices skyrocketed, going from $35 per share to an incredible $850 per share, per NASDAQ data.
Inflation is a natural part of the economic cycle, making gold a good investment at any time to help protect your wealth when these periods inevitably arise.
Protection from losses through diversification
Another benefit of investing in gold is that it helps diversify your portfolio, offering a valuable counterbalance to more-volatile assets like stocks. Gold prices tend to increase when stock prices fail, helping to offset your losses and reduce overall risk.
Start exploring your gold investment options by requesting a free investors kit here.
Gold is best used as a long-term investment
When it comes to gold investing, when to invest is less important than why (and how) you should invest. Gold investing isn't something you should try to "time" the way you might stock investing. Rather, it's best considered a long-term investment for all of the above reasons.
With this in mind, temporary price fluctuations in response to breaking news may be interesting to note, but they shouldn't significantly impact your decision to invest. As long as you buy the right amount and hold onto it for the long term, gold is a smart investment no matter when you buy or what the financial news of the day is.
The bottom line
Whether you're a seasoned investor or a beginner, gold can be a smart investment for many reasons. And there are plenty of ways to invest in gold, from physical bars and coins to ETFs and IRAs.
Take the time to do your research, understand your options and weigh them against your investing budget, goals and risk tolerance. And don't let questions of timing influence your decision too heavily. Given its benefits as a long-term investment, whenever you purchase it, it has the potential to deliver solid returns throughout many economic cycles.
