➡️ Gold is one of the most talked about protective assets in the financial markets, and for good reason. Here are five key aspects that are important for anyone considering gold in their investment portfolio to understand:
▪️ The nature of a protective asset: Gold has traditionally been referred to as a ‘safe haven’ for capital. In times of crisis, inflation or volatile national currencies, investors often look to this particular metal because it has historically maintained value regardless of external factors.
▪️ Anti-inflation: When money depreciates, gold can act as a ‘hedge fund’ against inflation. Its price tends to rise with the rate of inflation, protecting investors’ purchasing power.
▪️ Portfolio diversification: Adding gold reduces overall portfolio volatility and minimises risk. Gold often moves in counter-phase to stock markets and national currencies, making it an effective diversification tool.
▪️ Liquidity and accessibility: Gold is easy to buy and sell anywhere in the world. There are many ways to invest: physical bars, coins, exchange-traded funds (ETFs), futures.
▪️ Does not generate passive income: Gold is a conservative asset: it does not generate interest income or dividends. Its key function is to preserve the value of capital, not to quickly multiply funds.
💫 Gold is a powerful tool for risk mitigation and portfolio stabilisation, especially in unstable times. However, it is important to remember its peculiarities and form an investment strategy based on your goals.
