Let’s choose gold.
My current intention is to discuss the prospects of gold as the main protective asset for all investors of the world. At first I should note that gold can help to reduce the overall volatility of your investment portfolio and improve its investment performance. By the way this can be achieved either through an increase of profitability without increasing your risk. And off course vise versa this can be carried out either through reducing your risk but without reducing returns.
Gold is known as an extremely fine diversificator precisely because of its specific correlation with the stock market. It is much better to protect the entire portfolio from volatility than those traditional tools for diversification such as bonds and treasury bills. The reason for this phenomenon is simple. The matter is that those economic factors that contribute to the price of gold are different from those ones that determine the value of the shares. The price depends on the past financial performance of companies and forecasts of its future growth. The cost of bonds is determined by the reliability and level of profitability in other words it also depends on the financial situation of the company its current and future solvency. The price of gold is used to varying due to other factors such as the ratio between supply and demand, geopolitical situation, the situation on the currency market, inflationary expectations, etc.
It’s known that gold glitters when everything gets dim. Precious metals, especially gold, have a reputation of eternal values. In other words this means that investors always consider these precious metals to be a shelter in hard times when any kind of investment in traditional assets can only be a complete disappointment in the form of huge losses. By the way investing in gold can be effective only in the long run, moreover you should not rely on a possibility to obtain a considerably high yield. The inclusion of gold in a portfolio should be done in protective purposes in order to enjoy its stability during the periods of high inflation and political and economic uncertainty. But off course you won’t get any capital profits.
Sometimes people consider gold to be a so called “currency without a country”. It’s because it’s known that its value does not depend on the state of any national economy. Therefore, this precious metal is able to provide rather a reliable protection from any kinds of shock in the currency market.
It goes without saying that gold is known for its extremely high liquidity. The matter is that gold can be sold at any time, which can not be said of other protective assets such as real estate as well as many different currencies. Besides this gold is always able to protect you against the inflation.
At this moment gold attractiveness is on the upwards trend. People who want to get cash for gold are creating a unique opportunity on the market.
If you are one of those who plan to get some cash for gold, then please make sure that you know the usual traps of the cash for gold.
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