In the last 12 months, Americans have faced numerous financial challenges, including persistently high prices, increased interest rates, and ongoing worries about a potential recession. Finding the optimal long-term investment strategy amidst these conditions is indeed daunting.
Meanwhile, more Americans are becoming interested in investing in gold. The reason is clear: Gold prices have experienced a significant uptick over the past year, and its well-established reputation as a secure asset is particularly enticing in today’s economic environment.
If you’re considering adding gold to your investment portfolio, it’s important to understand the advantages of precious metals and how it may contribute to your financial objectives.
Advantages of investing in gold in 2024
Explore how gold could could be a valuable way to support your investment objectives this year:
Use Gold as hedge against inflation
While inflation has come down from its nearly 9% peak in 2022, it still remains well above the Federal Reserve’s 2% goal. The most recent Consumer Price Index indicates a year-over-year inflation increase of 4% for 2024. You might still be experiencing the impact of rising expenses, including housing, food, and travel costs.
Gold serves as a secure asset during inflationary periods, often experiencing price appreciation when the value of the dollar declines due to inflation. This trend occurs as investors turn to gold for its stability amidst currency devaluation, consequently driving up its price.
The most referenced example of this was in the 1970s. Inflation fluctuated during the decade, starting at just under 3% in 1972 and escalating to over 13% by the close of 1979. Concurrently, gold prices experienced a remarkable ascent, rising from approximately $50 per ounce to nearly $500, as reported by data from the World Gold Council.
Diversify your portfolio
Utilizing gold as a diversification tool for your broader long-term investment portfolio is among the most effective strategies to leverage its advantages.
Numerous experts suggest allocating only 5% to 10% of your portfolio to gold. By maintaining a smaller portion, you can facilitate the growth of traditional investments such as stocks over time. However, in times of market decline, gold can serve as a buffer to mitigate losses and maintain stability in your portfolio’s value. Particularly in the current year, with lingering concerns about a potential recession, investing in gold may offer a prudent means to navigate forthcoming uncertainties.
Liquidity of gold
While the benefits of gold in terms of inflation protection and diversification are often highlighted, its liquidity is an aspect that might not receive as much attention.
Gold serves not just as an investment asset but also as a longstanding form of currency, spanning millennia. Its universal recognition and ability to be bought and sold at any moment underscore its global value. Gold spot prices offer a transparent gauge of your investment’s worth, ensuring liquidity whenever needed. This characteristic reinforces gold’s reliability and stability as a store of value in your portfolio. Given its finite nature and universal worth, investing in gold offers a secure asset that transcends borders.
In Conclusion
Amidst a year characterized by persistent economic unpredictability, gold stands out for its stability, offering potential advantages. Despite experiencing notable price surges, nearing all-time highs several months ago, gold has demonstrated resilience amidst market volatility elsewhere. Whether seeking protection against inflation, diversification alongside traditional asset growth, or enhanced liquidity backed by historical significance, considering gold as part of your investment strategy could prove beneficial.
Still unsure if a gold investment aligns with your goals? Consult with an expert to explore your options and understand how gold could integrate into your long-term investment strategy.
