Friday, 15 July 2016

Is investing in Physical Gold Better than Paper Money?

If you are not familiar with gold as an investment, it might seem a bit bizarre that people invest in bulk of metal for financial reasons!


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Following are some of the reasons why people opt to buy physical gold.

Store of Value
Gold was once used as currency in the world. If you look at the procuring power of Gold over a period of time, its power has only increased. Contrariwise, if you look at the procuring power of some major national currencies over the same period, you would find that the buying power of these currencies has surely decreased. The reason behind this is that paper money is not a true impression of wealth. You may have healthy savings in a particular currency, but if that currency falls, your wealth would no longer have the same purchasing power it once did, owing to inflation. Many people who invest in gold do so because they believe that it is the only source to hold their savings in a safe manner.

Diversification
Another common reason people invest in physical gold is to expand their investment valise and limit their exposure to abrupt financial pitfall. This can be outstanding as gold tends to react very differently to a lot of standards. Gold is conventionally viewed as a ‘safe haven in hard times’, and as such tends to hike when financial market related investments perform under the weather. This type of contrary reciprocity is effective for reducing the loss to your investments, as it acts as a form of assurance. For example, if your stakes had significantly fallen, it is quite likely that your gold investment will increase in value over the same period of time.

Security in rough times
You may have noticed that the more the word ‘bankruptcy’ is mentioned in the news, the more articles on gold investment come to limelight! This radiates from the fact that Gold has been seen as a ‘safe haven’ investment - as it is frequently one of the few commodities that increase in an outperforming economy.
Portability/Worldwide value
The supremacy of Gold is that it gives you haulable wealth which you can exchange for goods and services all around the world, avoiding the need for different currencies. As gold has a high density and a high value, it does not take up lot of space and can be easily transported in the form of gold coins or gold bars or nuggets. It has a universally recognized value and can be exchanged for a cash value in many places all around the world.




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