Diversified investments? Gold should have a role in them! - September 04, 2019

Diversified investments? Gold should have a role in them!

Gold keeps breaking year-old records: just days ago it went over $1550 per ounce. This hasn’t happened since 10 September 2013.  As prices are going higher, it becomes harder and harder to deny the importance of the precious metal in any well-diversified portfolio. This is the only instrument that’s kept its importance since the dawn of mankind.

Last month gold broke a 6-year old record with going over $1507 per ounce. But it didn’t stop there: it went well above $1550 last week. It’s probably going to go even higher. This is a great opportunity to discover the importance of gold as it should be an important part of every well-diversified portfolio.

Gold Futures since August 2013

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Important since the dawn of mankind

Although gold came in fashion with the Egyptians around 3,000 B.C. it was known even before that. According to some archeological evidences, humans were already fascinated by the precious metal as far back as 40,000 B.C.

Ever since then, gold had a prominent place in people’s life. It was the symbol of gods. It was a sign of wealth. It was common money. What hasn’t changed ever since it was discovered is that it has a special value.

People still want it

After thousands of years, in the era of digital everything, gold is still relevant. (There is a great reason behind it: gold has very special attributes.) Now gold even has its renaissance with central banks. No wonder gold demand hit a 3-year high due to central banks buying it like crazy.

Demand for Gold Q1 2019

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The reason why central banks are going for gold is simple: diversification. Although the US dollar is still the main reserve currency of the world, the so called big money likes to put its eggs in several baskets. Gold is one of the most stable investments there has ever been.

Don’t miss out on diversification

Their diversification should be an important lesson for individual investors, too. Even if someone has a well-diversified portfolio based on stocks and bonds, other instruments should be considered as well. Gold is the most obvious choice.

Especially in an economic atmosphere with negative or close to zero global interest rates. In a situation like this, gold will have a more important role with individual investors, too. Although gold doesn’t have an interest rate in the strictest sense, it’s able to keep its value, or even make a return on the long-term. It’s also more stable than cash, and it keeps its value a lot better during market fluctuations than money.

That’s why investors should think about buying gold before prices go even higher. That can be physical gold, stocks connected to gold mining or through an exchange traded fund (ETF). Just think about the historical importance of the metal: it’s keeping its importance for thousands of years now. No other instrument can say the same.

Disclaimer: This analysis is for general information and is not a recommendation to sell or buy any instrument. Since every investment holds some risk, our main business policy is based on diversification to minimize threats and maximize profits. Innovative Securities’ Profit Max has a diversified portfolio, which contains liquid instruments. This way, our clients can maintain liquidity, while achieving their personal investment goals on the long term.