Introduction
For many years the value of gold has been appreciating unlike what happens to most of the currencies of the world. Wise investors take golden insurance to guard against inflationary trends that are so unpredictable. Those who have invested in gold have not regretted as the returns have been impressive over the last one decade.
History
The returns from most of the investments are not sufficient to absorb the effects of inflation. In such times investors seek golden insurance to hedge their investments against inflation. It is during such times that the demand of gold increases pushing up the price. Those who have experience in gold trade realize that no matter what they pay for it they will surely reap a reward.
Major currencies of the world such as the euro and the dollar suffer in times of inflation. Many governments of the world have been called upon from time to time to take measure to rescue their currencies from inflation. This has never been the case where golden insurance against inflation has been taken.
Golden insurance can be taken in the form of ETFs (exchange-traded fund) or gold bullion. It is better to invest in gold in the form of ETFs instead of bullions. Bullions will incur extra costs in terms of transportation and storage. These extra costs are significant and will eat into your returns so it is better to avoid them where possible.
Features
EFTs is a better golden insurance than mutual funds or stocks. The prices of the stocks are based on the price of the gold and they therefore tend to drop more drastically. No matter how careful a person is in calculating the prices of gold, the risk of making losses still exists. Trading in ETFs is a more economical way of trading as the transaction costs are lower.
People in the Asian economies have woken up to the fact that getting golden insurance is very important. The authorities have started to relax some of the rules that previously stood in the way of people who wanted to invest in gold. Traditionally these countries have been holding their reserves in dollars but this too has not been spared by inflation.
The major currencies of the world have been weakened by inflation leading to the need for golden insurance. These currencies have been the purchasing power preferred by many people. This situation has led to the need of having alternatives that will allow people to make investments with minimum losses. Investing in gold can cushion the investors against the panic that occurs during inflation, better than real estate. There is no other asset that can be able to do this better than gold.
Tips and comments
Despite the advantages of the investing in gold, golden insurance is not perfect as it can be stolen from the owner. But it is solid against economic downturns. In deflationary times paper money is better during deflation while gold is the best option during inflation. Investors should have well diversified portfolios with 10% of it being in gold.
