Although it is no longer a primary form of currency in the developed world, gold remains a popular investment for several reasons gold ira companies.
- Liquidity. Gold can be easily converted into cash anywhere in the world. In addition to real cash, liquidity and universality of gold have no competitor.
- It maintains its value. Gold tends to maintain its value over time. Economists consider that even the price of gold is not indicative of its value. That is, even if the price drops, the underlying value of gold doesn’t change much. This is mainly because there is a fixed amount of gold due to the fact that it is a commodity, while the US dollar, which is a form of fiat currency, has no inherent value.
- Inflation coverage. Gold increases in value when inflation takes hold. Since gold is priced in euros, any deterioration in the euro will logically lead to a higher price of gold. As a result, during inflationary times, gold offers a much more stable investment than cash.
- Diversification. Adding different securities to your portfolio is an essential way to diversify and reduce the overall risk of your investments. Also, because gold often moves inversely to stock and money securities, it provides an especially effective way to diversify.
- Universally desired investment. Gold remains a universal commodity. Although countries sell their currency futures, Treasury bonds, and other securities worldwide, unlike gold, they are subject to political chaos.
- Gold is used as an input in products. Since gold is used in the production of various products, including jewelry and electronic products, there is a reliable demand that further stabilizes the price of gold. Furthermore, in times of increased demand, these markets can force gold prices higher.