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The Golden Price: Why Precious Metals Should Form A Part Of Your Portfolio

 

The global economy seems stuck in the mud. Since the disruption of the pandemic, commerce has struggled to get back on track and this has affected the stock market as well as the supermarket. Consumers are under a greater amount of economic pressure too, with inflation stealing value from their wages and from their household budgets as it becomes increasingly difficult to make ends meet.

On top of this is an unprecedented energy price hike caused by conflicts in Eastern Europe and elsewhere. This has put precious metals, and gold in particular, on an upward trend and making them an important component of any investment portfolio.

 

The Upward Trend Of Gold

The prospects for gold in 2023 are good. Economic uncertainty and global conflicts are two of the biggest current drivers of the price of gold, and neither is showing signs of stopping. The Federal Reserve of America is signalling that it will slow interest rate increases over the next year. Central banks in Europe are following suit, meaning interest rates across the globe will stabilise before decreasing and further boost the price of gold on the precious metal markets.

Global inflation is also helping to push up the price of physical gold. Investors, big and small, are looking for places to store their money that will give them value on their investment. Currencies are struggling to maintain their worth, and switching a portion of an investment portfolio to gold helps to offset the loss in value that inflation causes.

Physical Gold are helping investors of every size to diversify their portfolios and add physical gold assets, not futures or mining shares, to their list of investments. Their service makes access to gold easy, and at competitive prices. They can store your gold securely for you, or you can keep it yourself. When the time comes to sell, they can help you to do that too. Unlike most investments, certain gold coins are even free from Capital Gains Tax, meaning all profits can be kept by investors.

 

Gold Versus Currency

Unlike paper currencies, gold is a physical and tangible asset. It has been a valuable and prized commodity for millennia due to its scarcity. Currency is subjected to changes in value by a wide variety of variables, including public trust and inflation. In the current economic climate currencies across the world are facing several different challenges, with inflation and public trust among the largest. This is why more people are turning to gold as a hedge against these forces.

As inflation grows, the value of paper currency decreases. Savings are worthless. Inflation affects the housing market too, reducing the value of property even if prices hold or marginally increase. Though currency does have its advantages, especially when it comes to trading, the stability of gold makes it a safe haven for investors in times of economic uncertainty and turmoil.

The last time in recent history that inflation reached the levels it is at now was in the early 1970s and lasted until the end of the decade, roughly. During this period inflation averaged around 9%, while gold had an annualised return of 35%. With no end in sight to inflation, economic history shows that investing in gold is a safer place to put your money than currency. This is one of the reasons we can expect the price of gold to trend upward over the next year and beyond if inflationary trends continue.

Soft Dollars Equal Strong Gold

The recent and consistent upward trend of the price of gold began in the last quarter of 2022. The US Federal Reserve began to slow down its raise in interest rates, softening the value of the dollar. This made many investors turn to gold as a way to protect value. Short-term projections suggest that the dollar will continue to soften throughout 2023, as the Federal Reserve has hinted that it will continue to slow down the rise of interest rates.

Commodities like precious metals can experience short-term volatility as changes in the global markets and announcements by central banks and investment groups can affect the price. In the long term, the price of gold is on a continuous upward trend, however. Inflation and slowing interest rates will affect every aspect of the dollar, including US Treasuries. This is forcing investors of every size to look for alternatives, and the default hedge to a softening dollar value is investing in physical gold. This will keep the price of gold on an upward trend.

If the dollar becomes stronger in 2023 this trend will change, but there are no signs of this on the horizon. US government efforts to halt or slow inflation seem to have failed, and the value of the dollar has slumped while prices increase at home across the board. For the rest of 2023, and perhaps beyond, the price of gold looks set to increase while currencies stagnate slowly.

For investors looking for value in the next year, precious metals may be the most likely solution. Both the currency and stock markets have stagnated due to effects beyond their control, and inflation is stealing value away from many common investments such as property. Gold in particular may become less of a hedge and more of a centrepiece in many portfolios over the coming years.



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