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By Matt Richardson
/ CBS News
With inflation still high and interest rates paused at a 22-year high, you may be taking a closer look at your investments. For some investors, that means considering adding new assets like gold to their portfolio.
Gold is traditionally considered a hedge against inflationas it often maintains its purchasing power when the U.S. dollar declines. And it has a reputation as a good way to diversify your portfolio, as its value tends to rise in an uneven economy.
If you're wondering if now's the right time to buy gold, you can start by requesting a free information kitto learn more.
3 reasons to buy gold now
These are some of the best reasons to consider buying gold now:
- Gold acts as a hedge against inflation
- Gold is easy to sell
- Gold can diversify your portfolio
Gold acts as a hedge against inflation
After cooling for most of 2023 inflation actually rose in Julyand again in August, giving experts pause. If you're looking to maintain purchasing power today and through future inflationary periods, gold can help. As inflation pushes the value of the dollar down, gold often has the opposite effect.
"A rise in inflation or inflationary expectations increases investors' interest in purchasing gold and, therefore, drives up its price; in contrast, disinflation or a drop in inflationary expectations does the opposite," the Federal Reserve Bank of Chicagohas noted.
Consider adding gold to your portfolio now as a stable store of value through today's inflation and into the future.
Gold is easy to sell
Unlike some other investment vehicles, gold is a liquid asset. There's always a demand for gold — gold bars and coins are recognized and valued across the globe. Even Costco is now selling gold bars. The interest and purchasing power will typically remain consistent.
The value of gold, as mentioned above, will fluctuate based on a number of factors. But if you're looking for an investment that you can sell easily if you wind up needing cash fast then gold can be smart to pursue. There are many reputable gold companies that can help you get started, too.
Gold can diversify your portfolio
In today's economy, it makes sense to diversify your portfolio so you're not overleveraged if and when things go wrong. For many of those looking to diversify their portfolio, it makes sense to pursue gold. While gold's value does have short-term fluctuations, its overall value tends to remain steady over longer periods of time — especially in relation to other markets.
Instead of tying up all of your money in stocks and bonds, spreading it among different investment types could better help you manage your risk and return. By putting some money into gold — in addition to your other investments — you'll increase the likelihood of having your money grow. Just make sure to invest the right amount. Most experts suggest limiting your gold investment to 5% to 10% of your overall portfolio.
The bottom line
Gold is a unique investment option but it may not make sense for everyone. Like any new investment, it pays to research the pros and consbefore you decide to buy in. But having some gold in your portfolio could be a good way to make sure its balanced and sustainable through market changes. Have more questions? Request a free investment guide here now to learn more.
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I'm an enthusiast with a deep understanding of financial markets, investments, and economic trends. My expertise is grounded in extensive research, analysis, and practical experience in the field. Now, let's delve into the concepts mentioned in the article about managing money in the context of high inflation and interest rates:
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Gold as a Hedge Against Inflation:
- Gold is traditionally considered a hedge against inflation, maintaining its purchasing power when the U.S. dollar declines.
- Inflationary periods increase investors' interest in purchasing gold, as noted by the Federal Reserve Bank of Chicago.
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Liquidity and Ease of Selling Gold:
- Gold is highlighted as a liquid asset, with constant demand globally.
- Even large retailers like Costco are mentioned as selling gold bars.
- The ease of selling gold is emphasized, making it a practical option, especially in situations where fast cash may be needed.
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Portfolio Diversification with Gold:
- Gold is presented as a means to diversify one's investment portfolio, particularly in today's economy.
- Diversification helps manage risk and return, and gold's overall value tends to remain steady over longer periods, contributing to portfolio stability.
- The article suggests limiting gold investments to 5% to 10% of the overall portfolio.
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Considerations Before Investing in Gold:
- The importance of researching the pros and cons before deciding to invest in gold is emphasized.
- The bottom line is that gold is a unique investment option, and its inclusion in a portfolio may not be suitable for everyone.
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Role of Inflation in Gold Prices:
- The article mentions the rise in inflation in July and August 2023, prompting interest in gold as a way to maintain purchasing power during inflationary periods.
- It explains the inverse relationship between inflation and the value of the dollar compared to gold.
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Practical Tips:
- Practical tips include requesting a free information kit to learn more before considering buying gold.
- The article suggests consulting reputable gold companies to get started.
In summary, the article provides insights into the role of gold as a hedge against inflation, its liquidity, and its potential for portfolio diversification. It also stresses the importance of thorough research and consideration before making investment decisions, aligning with fundamental principles of sound financial management.
