If you pay attention to the markets, you know that commodities fluctuate just as much as the stock market. Usually these offset each other – when gold is doing well, the stock market is doing poorly, and vice versa. At the beginning of 2014, gold plummeted to around $1,200 per ounce, sending most investors into a frenzy concerning the future of gold. However, gold prices have risen significantly since then, proving that gold as a store of value is far from over.
So why is gold such a safe investment? Outlined below are three solid reasons why gold is, and will continue to be, a reliable store of wealth:
Gold Protects Against an Over-Inflated Stock Market:
Remember how gold and the stock market seem to work opposite of one another? Well that’s part of the beauty of investing in gold. You can take the wealth you acquire in a 401K or traditional IRA and turn it into physical gold. This protects your wealth from the inevitable “bubble burst” of the stock market, and will keep you from losing thousands in a matter of days. Gold, of course, goes up and down in value, but it holds value too, and over time will keep you from a drastic decline in your portfolio value.
Gold Protects Against Inflation:
Due to inflation, the U.S. dollar just can’t buy what it used to. Every year, it takes more and more dollars to buy the things that you need on a daily basis, whether it’s gas or food or consumer goods. Gold, however, has kept pace with inflation and is untarnished by the U.S. government’s quantitative easing programs. Gold has steadily increased in value over the years, while the U.S. dollar has lost value. Therefore, you protect your portfolio by moving your money out of cash and into an asset that’s better protected from inflation.
Gold Safeguards Against Market Uncertainty:
In February 2014, the debt ceiling was suspended yet again, guaranteeing another billion dollars in U.S. spending in the foreseeable future. As the debt ceiling continues to grow, things like Social Security and Medicare also come into play, sending panic and uncertainty into the markets. These trends are almost guaranteed to continue for the United States, which is why gold is a great choice right now. Since gold remains relatively independent of market cycles, you can invest in gold and not have to worry about the safety of your retirement funds.
Like any investment, gold isn’t a guarantee. However, at times of economic uncertainty, escalating prices, and increased national debt, gold is a safe way to diversify your assets and take some of your wealth out of cash. As you’re planning for retirement, consider making gold a part of your long-term portfolio.
This is a guest post from a contributing author at American Bullion Inc. American Bullion is a nationally listed precious metals dealer with the U.S. Mint. They help individuals rollover or transfer funds into a precious metals IRA, as well as buy physical gold and silver coins, bars, and bullion.