One of the most prevailing pieces of advice for an investment portfolio is to diversify your portfolio. This is to minimize the loss incurred by an investor due to a failure in a company or an industry. Gold, is an excellent way to diversify a portfolio. In 2016, particularly, the precious metal appears to have experienced an upswing.
There is now, compared to recent times, a greater number of institutions and nations investing in the yellow metal. There are more and more people who are willing to buy gold. Here are some of the reasons that you should consider investing in the precious metal:
The precious metal enjoys the distinct ability of being able to maintain its value. One of the troubling trends of currency, particularly the U.S. dollar, is its devaluation. As time goes by, or the economy worsens, currency can decrease in value. Gold, on the other hand, may change in cost. Its value however remains more or less the same. When you exchange a certain amount of money for a quantity of gold, you can ensure that the gold will retain its value unlike the paper currency.
Gold, for a long time, has been considered a hedge against inflation. This is why many people choose to invest in the commodity when inflation is on the rise. This is a trend that is currently occurring, worldwide. Nations and banks are putting a great deal of money into buying as much gold as they can. The precious metal is currently experiencing the second highest purchasing rate in a considerable period of time.
Reduction in Supply
In the recent years, the production of gold has decreased significantly. The gold that has been easy to access has been mined almost completely. This has resulted in mining companies having to drill further to retrieve the precious metal. The increase in production costs among other factors has caused the manufacturing of the yellow metal to slow down. The shortage in supply of the precious metal has affected its price. When there are lower amounts of the commodity to be bought, prices of the metal tend to increase considerably.
Increase in Demand
The reduction in supply is only exacerbated by an increase in demand. Countries such as India and China have experienced a surge in demand for the commodity. Their consumers, in particular, are asking for greater quantities of the precious metal. Much like the decrease in supply, the rise in demand also affects the price. The price of the yellow metal has increased along with its need. This combined with the lowered supply is causing the value of the precious metal to increase even more.
These are just some of the factors that make gold such a popular commodity. This is truer than ever since the beginning of 2016. Individuals and institutions alike are rushing to claim varying quantities of the precious metal. This is why gold may serve as security for your portfolio. It is relatively unaffected by other aspects of the market. You may be able to secure at least part of your investment against losses by investing in the precious metal.