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Over the last few years, more and more investors have turned their attention to gold. This uptick in interest has been due, in large part, to inflation. As prices for everyday items started to climb, and interest rates were raised to try and temper them, investors began looking for safer places to put their money. Gold, known for its stability during tough times, became an attractive option.
The surge in investor demand then led to an uptick in the price of gold — a trend that sustained and shifted into overdrive over the last few months. Gold hit its first record price of the year on March 8, and just over a month later, the price climbed to another new high. That resulted in more demand for gold by investors, leading the prior record to be eclipsed in late May — a record that was then surpassed in mid-August.
But here’s where things get interesting. Inflation is cooling, which can lead to a downturn in gold prices. That’s not what’s happening this time, though. Despite a cooling inflationary environment, gold prices have continued their upward march and just reached a new milestone of over $2,525 per ounce. So why are investors still buying in and should you follow the trend? That’s what we will explain below.
Don’t miss out on the uptick in gold prices. Start investing in the precious metal today.
4 benefits of buying gold right now
There are a few big benefits of gold investing now amid record price surges, including:
The potential for further price appreciation
Despite reaching multiple highs this year, many analysts believe that gold still has room for growth. Factors such as increasing demand from emerging markets, limited new gold discoveries and the challenges of extraction could contribute to sustained price appreciation in the long term.
Gold also has growing industrial applications, and as industries continue to innovate, the demand for gold in technological applications is likely to increase, potentially supporting higher prices in the long term. Plus, central banks around the world have been adding to their gold reserves, a trend that shows no signs of abating.
In turn, some experts believe that gold could hit more price milestones this year, and may even climb to $3,000 per ounce. So, while it may seem counterintuitive to buy gold when the price is at an all-time high, it could pay off over time, perhaps sooner than expected.
Find out how the right gold investment could benefit you.
It offers unique protections for your portfolio
While inflation may be cooling, the global economic outlook remains uncertain. Geopolitical tensions, trade disputes and other related issues can cast shadows over financial markets, and when that happens, it can lead to big losses from traditional assets. That’s where gold comes in. Gold’s historical performance during times of crisis makes it an attractive option for investors looking to protect their wealth against potential economic downturns.
Gold also has a low correlation with other asset classes, meaning that when other investments, like stocks, are experiencing a downturn, gold will typically swing upward instead. That means by adding gold to a diversified portfolio, you can potentially reduce the overall risk in your portfolio and improve your long-term returns.
Gold can hedge against currency fluctuations
As central banks worldwide continue to grapple with monetary policies, currencies are at risk of increased volatility. Gold can serve as a hedge against currency fluctuations, so by allocating a portion of your portfolio to gold, you can potentially mitigate the risk of significant losses due to unexpected currency devaluations or economic crises.
Gold’s effectiveness as a currency hedge stems from its inverse relationship with traditional currencies. For example, when the value of the dollar declines against other currencies, the price of gold typically rises, as it becomes cheaper for holders of other currencies to purchase. This relationship extends to other major currencies as well.
Gold’s role as a currency hedge is amplified by its status as a universally recognized store of value. Unlike traditional currencies, which can be subject to inflationary pressures, gold’s supply is limited and its value is not directly tied to any single economy. This, in turn, provides another layer of protection against the erosion of your wealth.
It’s easy to buy and sell
Gold remains available, and there are numerous gold assets to choose from, all with different price points (and a range of ways to buy them). That makes this type of investment accessible for nearly anyone who wants to buy in — and it also makes it simple to sell off your assets when you need to.
For example, you can easily buy or sell physical gold bullion through various channels, including local gold dealers, online precious metal marketplaces and even big box retailers like Costco and Walmart. Those who prefer digital investing assets have a range of options too, from gold stocks to gold exchange-traded funds (ETFs) and gold mutual funds.
The bottom line
The recent surge in gold prices above $2,500 per ounce marks another significant milestone in the precious metal’s storied history. While this price level may seem daunting to potential investors, the enduring benefits of gold ownership continue to make it an attractive option for those looking to navigate the complexities of today’s financial landscape.
