Why now’s the perfect time to invest in gold - by Richard Gregory

Monday, 23 May 2016
Uncertainty is everywhere; from the upcoming American presidential election and the UK’s EU referendum to the underperformance of the Chinese economy, there are a number of uncertain markets at present. As a result, now is the perfect time to invest in gold. Here’s why.

Diversification

Diversified portfolios are perfect when the markets turn sour. In order to diversify, Forbes recommends holding a couple of percent of gold in your portfolio. According to Forbes, 5% is too much gold, but 2-3% is probably about right.

If your investment portfolio is poorly diversified, then losses are likely to be much larger when the markets stop working in your favour. Diversification is the only way to secure wealth and gold is the perfect diversification instrument.

Gold has everything in its favour

According to Michael Brush, gold has everything in its favour at the moment and stocks are up by almost 50% this year.

In many places interest rates on savings remain negligible, and there are continual calls for the elimination of high-denomination bank bills. Many central bank interest rates are also currently holding at record lows, which reinforces the view that now is gold’s chance to shine.

Historically speaking, gold performs well when interest rates turn negative (as they currently are in Japan and Europe), which makes it an incredibly attractive investment for investors in the current market.

Gold is your safeguard

In turbulent markets, gold is your safeguard asset and your insurance should anything go wrong with your other investments. It will protect you against global disaster, geo-political issues and inflation.

At present, there’s so much uncertainty surrounding the actions of the ECB in Europe, the Federal Reserve in America and the Bank of England in the UK that we’re seeing investors lose confidence in interest rates. Many believe that the Central Banks be unwilling to unwind their debts without creating problems, so investors are turning to gold, which is safe from these risks.

To conclude, uncertainty in the current economic climate means that now is the perfect time to invest in gold. However, before you diversify your portfolio to add gold, or indeed invest in any way, it may be best to take the advice of experts such as Stunt & Co. Regardless of whether you’re looking to buy physical assets or bet on price movements, the correct knowledge is vital.