Gold as a Means of Wealth Preservation
When the economy becomes unstable, those who have built up their wealth should look for ways to preserve it. One of the easiest ways to preserve wealth is by investing in gold. Throughout history, paper money systems tend to go by the wayside while gold is the only currency in the world that remains in its true form. MoneyWeek writes, “Gold can be a very useful way to diversify your portfolio. It’s relatively rare, and its value often doesn’t move in line with other assets such as equities or property.”
The Importance of Wealth Preservation
It’s vital to have asset protections in place before hyperinflation causes currencies to collapse. Once people have accumulated a significant amount of wealth, they should select relatively safe sanctuaries to avoid being wiped out financially during economic crises. Today, the world is facing unsure economic times. In addition, most countries now use a fiat monetary system, which is backed by each nation’s government.
Within this system, the dollar has lost its value. Excessive wars, major corporations that successfully evade taxes and social programs have placed the country on rocky ground when it comes to sustaining the economy. The future of the country’s devaluation has yet to be determined, but a few signs are pointing to a hyperinflation. The danger of the fiat money system is that it gives governments the ability to print money to deliver a sense of prosperity. When too much currency is created, it often leads to corruption and waste. If this occurs, then inflation and hyperinflation are the consequences.
According to BankRate, investors shouldn’t look at gold as an investment. Gold and silver have long been a primary source of asset protection. The reasons behind this vary from the commodities being rare and precious to their having industrial purposes. For some investors, placing a percentage of their net worth into gold and silver is a waste of their investment dollars. Gold and silver are often stagnant investments since the commodities can’t be used for food, shelter or to fuel vehicles. In addition, gold and silver doesn’t increase or decrease size-wise like bonds and stocks. Industry experts advise investors to allocate 5 percent to 15 percent of their wealth to gold.
During stable economic periods, investors don’t include gold ownership in their traditional investment plans. Instead, the commodity is becoming the insurance policy choice for many investors when volatility rules the day. However, when it comes to investing, diversity should always be a consideration. Chris Hyzy, the chief investment officer for U.S. Trust, says, “You still have to understand that you shouldn’t own too much of any one thing.”
Historically speaking, gold has continually offered investors the diversifying component that every portfolio requires. Gold is not connected to real estate, stocks or bonds, so it provides this element in spades.
Different Gold Investment Options
One of the most noticeable differences between investing in gold today compared to several centuries ago is the amount of investment options that are now available. Investopedia posted a list of today’s gold investment options. The list includes gold futures, gold coins and gold mutual funds. It even features classics like gold certificates, gold bullion and gold jewelry.
Investing in physical gold is worthwhile because it’s a widespread finite currency. It’s also one that most central banks hold and a good way for people to pass wealth to future generations.
Those who decide to invest in bullion coins or bars will own investment-grade coins for a small dividend to gold’s spot price as determined by the markets. The price of gold establishes the value of bullion coins and bars.
Gold certificates are another option, but only one government backed choice exists, which is the Perth Mint Certificate Programme. If you invest in it, you’ll own investment grade gold that the Australian government stores in vaults in the Perth Mint of Western Australia. This gold is insured by Lloyds of London, and for security, it is stored in the government mint. Those who choose this option will have unallocated gold. This investment is free of shipping, holding and insurance costs.
Maintain Your Wealth
In verifying gold’s security potential, Todd Ambrose, Precious Metals Distributor at the International Silver Network, writes, “Anyone can trade gold for any other currency if something happens to their country’s currency.” By using gold as a means of wealth preservation, you’ll be creating your own asset insurance policy. This step protects you even more since it adds diversity to your portfolio. To read more articles about protecting your wealth by investing in gold, visit the PersonalMoneyStore.