We all know how unpredictable the stock market is, especially during this pandemic. We’ve seen the Nasdaq hit their new highs in 2020, but also seen stocks such as Tesla plunge more than 20% in a day.
On the contrary, amidst all the market uncertainty, gold prices have surged over the past few months. In August 2020, the price of gold topped US$2,000 an ounce, steamrolling the record $1,921 set in 2011.
Why people invest in gold
Gold as a safe haven: A precious metal, gold has been around for centuries, preserving its value over the years and proving to be a good hedge against inflation. It is known to be a safe haven investors fall back on in times of market volatility, as gold is seen as a good store of monetary value.
Gold is a tangible asset: Much like cash and property, gold is an item you can see, feel and touch. This makes it an asset you can possess physically, giving it a perception of safety unlike other investment assets such as stocks, bonds or cryptocurrencies.
Diversification of your portfolio: Diversification is one way you can reduce the risk you take in your portfolio. This is done by spreading your investments across asset classes, geographies and industries so that when one industry or asset class takes a hit, your entire portfolio won’t go under.
Adding gold to your portfolio is one way to increase diversification, especially as gold has shown to have low correlation to major asset classes.
Globally accepted and recognised: Gold is a precious metal that is recognised and valued all across the world. Be it a jewellery seller in Singapore, South Korea, or the USA, you will be able to sell your gold.
Visual appeal: Some people might purchase gold not just for investment reasons, but also because gold items can look beautiful, classy and elegant. This could be gold items such as your wedding bands, necklace, earrings and bangles.