The new way to trade gold is on the Forex Market. Here you can use leverage and trade gold against many different currencies. The Forex Market offers fast in and out liquidity advantages and options.
The Traditional Methods of owning gold
Countless financial experts have always claimed that there are many benefits to be had if one invests in gold. Most feel that gold is the very best investment choice. This is especially so when we are faced with a volatile stock market and uncertain economic times.
Here are some of the fundamental reasons why it is good to invest in the “yellow metal”
1.Gold is not just a commodity, but is also a currency that has evolved over the last five thousand years in the marketplace.
2.Gold, along with silver, are the two tangible currencies that are not controlled by governments. Monetary currencies like the Japanese Yen or the US Dollar are “fiat,” this means that they are merely worth a value that was given by a government decree. They are legal tender but do not represent anything tangible.
3.Fiat currencies lose their worth or value once they are created in great amounts. This causes what is known as hyperinflation.
Gold as a Hedge Against Currencies and Inflation
Gold plays an important role as a hedge against inflation as gold appreciates. As most investors realize that their portfolios are losing value, they will naturally gravitate towards positioning their investments in hard assets that maintain their value.
Gold benefits when the US Dollar declines as gold’s price is in US Dollars in the global market. Central banks who would want to invest in gold will have to sell their US Dollars to buy gold in the world market. This practice naturally drives the dollar lower as more and more investors are letting go of their dollars in order to diversify. The declining dollar makes the yellow metal more affordable for investors holding other currencies as this naturally results in more demand from those investors who are holding stronger currencies.
Gold Used as a Safe Haven
Most investors will look for safe havens during times of economic and political uncertainty, and they naturally turn to gold. This is because history is replete with collapsed currencies, collapsed empires and even political coups. During such times, people who had held on to gold were able to survive those times. Many have even used their gold in order to escape from such problems and save themselves and their families. Even today, once there is news of uncertainty in any part of the world, most investors turn to gold as their safe haven.
Diversifying Investment with Gold
It does not matter if one is worried about declining US Dollars, inflation or protecting one’s wealth, gold has historically been an investment that adds a crucial diversifying component to any portfolio.
There are many people who consider gold as an investment that is risk-free because gold is capable of maintaining its value. Gold offers a basis for financial savings in cases of sudden increases in inflation.
However, it is also worth noting that gold, like any other investment, has disadvantages. Gold does well whenever there are economic problems but does not too good when financial times are well. Another disadvantage is that gold does not pay any dividend like shares or stock investments.
Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.