Before investment in gold what you should you know ?
Are you looking for an opportunity to investment in Gold, so that it included in your asset portfolio?
As compared to the various market investments, Gold gains is the highest volume in terms of market activities. We can liquidate this investment into cash any day, anytime. Investing in gold also very simple and lucrative. However before the gold investment takes you on high, let us discuss few queries that you as an investor must find answers to.
Why should you invest in gold?
There could be a numbers of reasons behind your will to spend money on purchasing gold. Investment could be a major one. Let us find out why you should consider investing in gold.
Alternative investment such as bonds or shares, the price of gold does not move in the same direction. But the returns same from other portfolio investments are sinking. However, investors should be very carefull before too much money in purchase of this dead asset.
The important part is knowing how to fit this part of investment into your financial portfolio. This is not something that should overly concern you. Always remember applying the thumb rule not to include more than 5 percent of any asset into your portfolio.
Gold can act as a shield against a weak currency:
Worldwide, gold is considered to be quite a valuable resource. Being a prized possession, gold value does not actually move in the same direction as any other currency.What does this indicate?
That even in the times of inflation, or when any of the bear market forces are trying to pull the dollar value down, gold will be one among those portfolio assets that will preserve its value and purchasing power.
What factors can drive the gold prices up?
According to investment experts, surging gold prices can be attributed to the following factors
Investors to anticipate soaring Inflation:
As mentioned earlier, gold acts as a safe hedge against inflation. This is one reason why investors look for piling gold assets, at times when they predict high inflation.
Collapsing currency value:
This is when people foresee the value of their currency (corresponding to other currencies and assets) to weaken. As a result of this, they end up purchasing gold.
It include any social and political emergency situations like a political confrontation, or a terrorist act, or a state of war. These kinds of circumstances can also be the explanation to why people accumulate gold.
A plunge in the stock valuation:
In situations of market fell down , investors face towards purchasing gold just to be on the safer end. As a result, gold prices tend to surge.
What factors can drive the gold prices down?
Let us find out a few reasons behind descending gold prices.
When fearing low inflation:
In times of a low inflation, there is a dwindling demand for this appreciated asset. This is because at this time, people are not as bothered about the deteriorating value of their money.
A rising market for stocks and or bonds:
When the securities market are performing good , investors may be driven towards investing their money in the same. For this, they will be driven to pitch their gold stocks. Rather, they prefer to put their money into more profitable investments of the moment that is, the securities markets.
Concluding this discussion, you should always discuss your financial plans with your advisor to ensure that it is fit for you and your complete portfolio. Be sure you do this before investing your hard-earned money in any kind of gold assets.