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6 reasons to invest in gold bullion

6 reasons to invest in gold bullion

Gold is one of the most valuable commodities in the market today. Not surprising, but it has retained its status in the market for several years. Investors buy gold bullion bars as a financial asset and hold it as a medium of wealth. It is one of the precious metals and is a safe investment. Gold is known to guard investments and preserve the cash’s value during geopolitical issues, economic turmoil, and stock market volatility.

Gold is money
We do not use gold as a currency anymore, but its role as money still makes it better than any currency. Moreover, gold has been a part of our history longer than any currency. It has been a store of value for about 3000 years. Money works as a long-term value reserve, and gold proves this better than any currency. If you compare the purchasing power of government currencies to gold, you will realize how the latter has only gained while the former lost in value. Since 1900, physical gold has been one of the best picks for long-term value storage. But, of course, there were times when the short-term currencies grew more in value than gold. However, if we see the long-term chart, it is the opposite.

Gold always retains its value
Unlike the government-created fiat currencies, gold bullion will not go bankrupt or default. Hence, it is a secure precious metal and an excellent haven against economic disturbances and financial market fluctuations. Moreover, fiat currencies typically have a lifespan of twenty-seven years. UK pound sterling, the longest-running fiat currency, too, has lost 99.5 percent of its original value since its launch in 1964.

No counterparty risk
Physical gold has zero counterparty risk. There is no counterparty when you own and hold gold bars or coins, unlike paper gold (such as gold-backed ETFs, gold certificates, or gold futures) that involve counterparties.

Supply constraints
Since the 1990s, the maximum gold supply in the market has come from the bullion gold sale extracted from the global central banks’ vaults. In 2008, the global central bank’s selling rate witnessed a sharp decline. Moreover, since 2000, there has also been a decline in the production of new gold from the mines. In 2000, the annual gold mining was 2573 metric tons, but it declined to 2444 in 2007. However, the US Geological Survey suggests that gold saw some production rebound in 2011 when the output was around 2700 metric tons. Sadly, new mines take almost a decade to produce. Naturally, this decline in the supply directly translates to a surge in the gold price; thus, buying gold bullion bars for as long as possible is lucrative.

Hedge your portfolio
Many people usually buy gold bullion bars to diversify their portfolios. So, they put approximately ten percent of their assets in physical gold. Of course, there may be market fluctuations like in every other investment, but gold responds differently to such financial events. Thus, helping people lower the risk exposure on the other assets. It may not be the first choice for growth capital, but gold provides better stability and protection than other assets.

Easy to buy and sell
It is a good idea to buy gold bullion bars because they are liquid. You can purchase gold bullion online or offline, but you must do it from a reputable supplier to ensure top-notch quality sans any risk. In addition, an authentic supplier will give you receipts for future reference, simplifying the process of a future sale. Most of the suppliers who sell physical gold also buy it. So, you can reach out to them with the same receipt and sell your asset whenever you need money.