Why invest in Gold?

Perhaps gold is the only metal that is considered an investment apart from being treated as the one having an ornamental value. People around the world invest in gold due to several reasons starting from it being a precious metal to seeing it as a tool that helps fight inflation. It is quite common in these days, that common people see gold investing a safer option than to invest in stocks that swing up and down in accordance with several economic and political factors. There are several reasons why you should stay invest in gold.

Safer investment

The basic need of investment is to create wealth and to increase capital. Investors invest in several forms in order to create wealth. Gold has been an investment opportunity especially in times when there could be a severe volatility in the market and investors consider investing in gold in these times of uncertainty in order to seek protection for their capital.

Volatility and diversified portfolio

Most of portfolios in the recent times are diversified. Each portfolio contains equities that belong to different categories. The idea behind this is to reduce the risk involved. If there is a downward trend in one category, the risk on the portfolio is compensated by the upward trend in the other category. This idea consistently reduces the risk and volatility factor in the portfolios. Taking into consideration this idea, the portfolios containing gold are generally more robust and less prone to volatility.

Risk Factors

The factors that are responsible for affecting the gold price are quite different from those that affect the share market or stocks. As an example, the gold price may be affected due to a rise in the price of Oil. This has a direct link to the supply and demand concept. Many of the nations in the middle east are producers of oil. These nations get more revenue due to high price of oil. These nations in the middle east are also good consumers of gold. As they receive more revenue from oil, the demand for gold naturally increases.

Gold Price

The price of gold changes according to the supply and demand which is a natural phenomenon. Consider the picture below which illustrates the trend for the price of gold and other metal silver. The trend chart is for all regions in the world in the last 1 year period.