2022 is right around the corner and it brings back an important question. Is gold a good investment in 2022? However, the answer is not as simple as the question. Is the investment long-term or short-term? What is the investment amount? Since gold has historically been a significant fixed asset across economic denominations, it easily comes up as the top choice for asset investment.
The History of Gold Investment
The use of gold as a trading instrument dates back to almost 4000 BC. Back then it was mostly used as a bartering tool. Historically, gold held a high trading and asset value in all the large civilizations beginning from the Egyptian to the Roman empire.
The first minted gold coin dates back to 500 BC under the rule of King Darius I of Persia. Over the years, regulations and acts saw gold become a significant tangible asset. In addition to offering significant value storage, there are some other benefits associated with gold that make it an investment haven for many.
Why Should Someone Invest in Gold?
The main reason to invest in gold is because of the safety it provides. Risk-averse investors tend to look for three key things – rewards, liquidity, and safety. Historically gold has been a go-to option considering the high liquidity value and price fixations. In recent years, the reward system from gold is also catching up with the other two because of newer investment options.
To answer why should someone invest in gold? One needs to look at two market-related factors:
- Gold always outperforms inflation. Regardless of the inflation condition, the tangible value of gold remains almost unchanged thanks to its international valuation as a reserve determinant.
- Gold investment is inversely proportional to any form of equity investment. Meaning every time the stock market goes down, the price of gold goes up. So, for anyone looking to play safe on their investment, gold can be an ideal choice. Having a mix of gold investments on the portfolio will help to maintain some ground even if the overall investment goes down through equities. Gold can act as a good buffer for investment.