For centuries, gold has been a preferred investment for investors worldwide due to its unique properties that make it stand out against other investment options.
Some of the primary reasons why investors have chosen gold historically include:
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Store of Value: Gold has been used as a store of value for centuries, and its value has consistently held up over the long term against the continued debasement of the value of national currencies, making it an excellent option for investors looking to preserve their wealth.
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Safe Haven: Gold is considered a safe-haven asset, which means that it tends to hold its value or increase in value during times of economic or political turmoil when the solvency of the financial system is called into question, providing a hedge against inflation and currency devaluation.
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Diversification: Investing in gold allows investors to diversify their portfolios, which helps to spread out risk and potentially reduce overall portfolio volatility.
More Than a Hedge
Source: VanEck, FactSet, Data as of December 2022.
In modern markets, gold is more than a hedge, it’s a store of value. Since 2000, Gold has outperformed U.S. stocks, bonds and treasuries.
Gold has three other unique characteristics that make it particularly attractive as part of a diversified portfolio as, no matter the form of government or financial system.
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Tangible Asset: Gold is a tangible asset, which means that investors physically own it eliminating the counterparty risk inherent to other financial assets. .
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Universal Acceptance: Gold is widely accepted as a form of payment and exchange, making it a liquid asset that can be easily bought and sold.
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Limited Supply: Gold is a finite resource, and its supply is limited, which means that it has an intrinsic value that is unlikely to be eroded over time.
Gold’s enduring appeal shows no signs of waning, with investors continuing to recognize the value of holding a physical asset that can withstand the test of time.