Invest in Gold?

Why Invest in Gold?

It's essential to protect your investment portfolio or savings from stock market fluctuations and inflation. For centuries people have used gold in times of economic unrest as a safe haven. The main reason for the effectiveness for gold as a wealth protector are:

Investing in Gold as a Protection against Inflation

The historical gold price teaches us that even in periods of lower inflation, investing in gold is a sensible way to achieve an effective risk/profit ratio for your portfolio or saved capital. As an example, to buy a barrel of crude oil today takes almost the same amount of gold as it would have 50 years ago. This in contrast to many national currencies, that have lost their value over time.

Investing in Gold as a Protection against Systemic Risk

Systemic risk has been compared to a bank run which has a cascading effect on other banks that are owed money by the first bank in trouble, causing a cascading failure. As depositors sense the ripple effects of default, and liquidity concerns cascade through money markets, a panic can spread through a market, with a sudden flight to quality. Owning hard assets like gold outside the financial system offers protection against risks associated with our financial system.

Investing in Gold a Risk Diversification

Most investment portfolios primary consist of stocks and securities. Risk factors that influence the gold price are very different than the risk factors influencing stocks and securities. That is why with certain macro economic developments gold behaves contrary to traditional asset classes. This is why gold can have a positive effect on the risk/ return ratio of your investment portfolio. Statistically portfolios holding gold have proven more robust and less volatile than those without gold.

Investing in Gold Is Changing

The role of gold changes with time and it doesn't take much to change its role from raw material to monetary metal. Due to the world economy's continuing monetary and financial unrest, both the market and the official sector seem to be close to a revaluation. Central bankers have been buyers in the gold market in the last year, for the first time in decades, and institutions as respected as JP Morgan and ICE (Intercontinental Exchange) are accepting gold as a Triple-A security.

The New Way of Investing in Gold

There are a number of ways to invest in gold, such as gold Exchange Traded Funds (ETFs), stock, futures or shares in gold mining companies. They all, however, share the same problem: none give you the same certainty as when you physically own the gold. GoldRepublic enables both private individuals as well as professional investors to buy gold, physical gold, with a 100% guarantee of ownership and the flexibility of doing transactions online.

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