Gold Portfolio Diversification

Gold Portfolio Diversification

Gold has been known and highly-valued since prehistoric times. It may have been the first metal used by humans. It was also used many times as the main currency in many monetary systems. One of the most important characteristics that has always made gold special is its great value, which has stayed stable throughout its life

When the economy struggles or monetary problems erupt, the price of gold historically has risen and was never affected by such economic recesses. This benefits gold investors whether they've bought the metal itself or a producer's stock.

Gold's tendency to rise in value when other assets, stocks, or bonds are falling is considered the strongest reason to invest in the precious metal. Global gold demand exceeds global gold supply, therefore giving its price the tendency to continuously increase though time. As many currencies and economies are being affected by inflation and deflation, gold has always been stable, as a result more investors are willing to invest in such a safe commodity.

Diversification has always been an important way to reduce the risk in any portfolio investment. Therefore gold would represent an excellent addition to any portfolio basket. There are actually many ways to invest in gold and to take advantage of its optimistic situation. You can buy gold itself, buy gold stocks, or buy gold derivatives. Any of these would give you the same advantage. But at the end, if you decide to invest in gold, you should limit the total investment to 5%.