![]() ![]() Perhaps that's why a gold investment during a recession may make sense.Īccording to data from GoldSilver, the price of gold rose during six of the eight largest stock market crashes over the past four decades. Gold is known to have a negative correlation with stocks, meaning when the stock market falls, gold often rises. ![]() ![]() Which other times is it beneficial to buy gold? If your other assets drop substantially, your gold shouldn't fall as much, and they may even gain value. While it's unlikely we'll experience a doomsday scenario that brings back the bartering system with physical products, holding a specific percentage of your assets in this form may be beneficial. If you're maxing out your retirement contributions and investing in your brokerage account, you may benefit from adding a stabilizing commodity like gold to your portfolio. Consequently, they can withstand the financial risk more than an older person might. Investors in their twenties and thirties generally have decades to save for retirement. Older people are often associated with gold, but young people may benefit from allocating some portfolio space for gold. Commodities like precious metals may withstand cash flow issues and currency devaluations better than other asset classes. You might consider buying gold if you're concerned about the current market turmoil. Who can benefit from buying gold during times of inflation Still, many investors view gold as a hedge based on its past performance in inflationary environments. Like other asset classes, gold may not continue to follow past trends, and it's impossible to know whether its price will rise or fall. During the same period, the gold value soared from $35 per share to $850 per share, according to NASDAQ data. When the value of the dollar decreases, people seek out gold and other safe and stable places to put their money to hedge against inflation.Ĭonsider this: The 1970s was a decade of inflation, starting with an average interest rate of 5.84% in 1970 and ending with a whopping average rate of 13.58% in 1980. Research from the World Gold Council states that when the inflation rate outpaces interest rate increases like we're seeing, commodities like gold may outshine some traditional financial assets. That's a significant spike from the 0% to 0.25% levels one year ago, but it doesn't keep pace with the rate of inflation over that period. Meanwhile, the Federal Reserve is following an aggressive interest rate hike schedule this year - the benchmark rate is currently 3% to 3.25%. ![]()
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