Ignore the hype. That is always some of the best advice where investing of any kind is concerned, but especially where investing in gold is the subject. Why? Though most experienced investors would tell you right away that there is always a lot of buzz around things like precious metals and gold, when you ask for advice about investing in gold, things get a bit unclear.
The Reasons to Continue Investing in Gold
So, what is the best advice about investing in gold? It is the perennial and “classic” advice of always making sure to just do it (as Nike likes to suggest). This is because gold is always going to increase in value over time. While it might seem to always hold its value, you need only look at a ten-year performance chart relating to gold and you see right away that it does more than just remain on an even keel.
Yes, since 2008, it has done a bit of a roller coaster routine, but that is more to do with the world’s various economic crises than with gold itself. The very reason for the flood of investing in gold is because of its reliability and ability to hold value.
A Good Example
Here is what we mean: If you have a pile of stocks and the markets plummet, it does not mean that your portfolio is going to end up at the same level it started. The stocks may lose all of their value, and this drags down the value of your portfolio.
However, if you have been regularly investing in gold and then convert stocks at the first sign of market turmoil…guess what? Your portfolio holds its value and may even increase substantially when millions of others rush to gold to offset losses and risk.
Of course, this tends to make many wonder exactly why gold holds the value. The simplest answers are that it is one of the few forms of real currency. In other words, there are few places in the world where a pure gold coin won’t be accepted. This alone says that investing in the medal is a practical idea.
However, the other reason is that it has two types of value. There is the value that is assigned to it by those who use it for currency – known as the extrinsic value – and then there is the value that gold just has – known as the intrinsic value.
The reason it has intrinsic value is complex, but begins with its past use as a backing for currency. It is also a rare metal, and there is not a tremendous amount of it available. It is currently also something used in industrial settings too. Thus, as investors rush to gold, the market price increases and the supply dwindles. This creates pressure on those who use it industrially, and this too increases the price or value of the metal.
So, what to do about investing in metals like gold? Just do it. Ignore the hype. And don’t listen to the naysayers. Throughout the decades, there have been people who have liked to say that gold is artificially valued and that there is some sort of bubble around it. Their comments just don’t hold any truth. Gold may have once been a long and slow climber, but today it can be a very volatile asset. Either way, it doesn’t lose its overall value. You will never see it decline to the point where you suffer huge losses as you would with other investment vehicles. It protects your wealth, and for that alone is worthy of investment.