A cardinal rule all savvy investments heed is that the future is rife with uncertainties. Investments made today are made with the highest probability of future returns. However, even if you are smart enough to invest in the right stocks or real estate, some facts about economics are simply out of lay people’s control. Think, for example, the financial crisis of 2008. Only a handful of people saw it coming. Since then, there have been other issues that have rocked the markets, notably the Brexit vote. If you expect your investments to bear fruit in a decade or so, you must anticipate such scenarios in advance.
Why You Need to Protect Your Investments
Cash assets—which include basically all investments like stocks, bonds, real estate, and fixed deposits—are highly vulnerable to market fluctuations caused by Keynesian economics and political winds. The pound was doing great until Britons voted to leave the largest shared market in the world: the EU. Now the value of the pound in the coming decade is highly uncertain. Similar problems can happen with other major world currencies, especially the dollar.
In case economic or political uncertainty devalues the dollar, then you can expect much of your cash wealth to disappear, just like it did for many British retirement savers following Brexit. On the plus side, there’s a solution to this problem: precious metals. Read below to find out how precious metals like gold can save your wealth even when the financially unthinkable happens.
How Precious Metals Can Protect Your Cash Assets
Precious metals like gold are priced inversely proportional to the dollar. It simply means that if the price of the dollar or another currencygoes down, then the value of precious metals go up, and vice versa. In this sense, precious metals like gold are considered hedges in times of financial uncertainty. If an occasion like Brexit causes the currency values to plunge, if you have gold assets, the value of those assets will go up. So, your overall wealth will be protected even if some cash assets become worthless.
Why Choose Gold
All precious metals can provide a hedge to your cash assets. However, gold is considered the best for the cause. Silver prices can be manipulated, as seen in the JP Morgan scandal exposed a few years back. Other metals like platinum and palladium may go up or down in value depending on industrial needs. Gold, on the other hand, has no major industrial need other than making jewelry, which is in turn a form of investment. More importantly, gold is a time-honored currency. You can trade the gold if the need ever arises. You can’t do the same with other precious metals.
How to Invest with Gold
To add gold to your investment portfolio or the retirement fund, first you will need to buy the gold from a well-known firm like Lear Capital. Buy national mint coins, gold bars, or bullion, so you can easily trade the gold. Gold is easier to store in coin or bar form as well. You can then safely store the physical gold you have brought, or entrust it to a self-directed IRA.
Now that you know what to do, do not hesitate to save your investments from events that are out of your control.