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Why Gold Is a Good Investment in Times of Uncertainty

When it comes to the economy, no one has a crystal ball. While markets can be up one day, they can come crashing down the next.

In today’s environment, there are a lot of conflicting signs. On one hand, unemployment was only 4.2% in the first quarter of 2022, but on the other, inflation is at a decades-long high, and there are questions about the sustainability of real estate prices in Toronto and across the country. Add spiking geopolitical uncertainty, and there are many concerns that the economy could come crashing down once again.

What can investors do to protect their wealth from a recession? Diversifying your portfolio and including assets that tend to hold their value despite negative economic factors is a safe way to go. That’s where investing in gold can be a useful strategy.

Where and How to Buy Gold?

Gold is one of those rare investments that you’re able to control directly. While there are options such as ETFs (Exchange-traded Funds) that allow you to gain exposure to gold without owning it, having direct control and ownership has some unique advantages:

  • No counter-party risk
  • Portability
  • A degree of anonymity
  • Ability to trade on your own terms

The great thing about buying gold coins in Toronto is that there are plenty of bullion dealers, giving you the freedom to compare prices and products. Depending on the market for bullion, sometimes product availability can be an issue. Having more options can help considerably.

How Gold Helps in a Crisis

As an investment vehicle, gold offers a number of unique qualities that help it perform better than stocks under certain economic conditions.

#1 An Inflation Hedge

Gold is well-known as an asset that protects purchasing power, and in times of high inflation, some investors like to move their wealth into the yellow metal. Currently, inflation is higher than it’s been in decades, as the pandemic recovery has injected funds into the global economy.

Gold has long been a favourite asset for investors concerned about losing their purchasing power to inflation.

#2 A Haven from Market Volatility

One of the qualities investors most appreciate about gold is its low correlation to stocks. Gold prices have very little to do with whether the stock market is rising or falling. When markets are volatile, gold provides a safe haven where you can keep your wealth without going through the same market shocks.

Generally, investors want to have a certain percentage of their portfolio already invested in gold. Market shocks are notoriously unpredictable, and investors can wake up to discover they’ve already experienced sizeable losses on the market.

#3 Long-Term Stability

Investors who have the goal of wealth preservation may dedicate a portion of their savings to gold because it has a track record of maintaining its wealth through crises. Gold does not usually offer the highgrowth that stocks have historically offered, but it offers more stability and peace of mind.

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