For companies looking to remain financially sustainable in the long term, portfolio and asset diversification is essential. This involves investing capital in numerous market securities to hedge against risks. While there are plenty of avenues companies can go down to diversify their portfolio, in a volatile market place it is always worth considering investing in gold and other precious metals.
Precious metals are scarce substances, with gold being known as the king of them all. Here we will explore why businesses and individuals should consider investing in gold, as well as the key benefits owners will get from doing so.
Investing in Gold Offers Protection Against Inflation
Arguably the key reason for companies to invest in gold is that it may protect investments against inflation. The reason this is possible is that gold is not affected by economic downturns. As other investments lose value because of economic crises, gold remains stable and reliable. If you want to hedge against inflation risks, one of the best things you can do today is feature gold in your company or individual investment portfolio.
In High Demand
If there’s one thing business owners need to know about gold, it’s that it’s always in high demand. Gold has numerous uses in the industrial process and it is used in building electronic and computing systems. But gold is mostly used in jewelry and as an investment vehicle.
In the jewelry industry this yellow metal is used to make expensive necklaces, watches, rings, and so on. In many cultures, this has been a way for people to store their wealth and pass on inheritances. Investment can take the form of gold bars or exchange-traded funds (ETFs). When markets are volatile demand for gold increases and so does its price.
High Liquidity Rate
Another very attractive reason for investing in gold is its high liquidity rate. This is the rate at which gold is converted to cash. To put it simply, liquidity is how fast you can get cash from your investment. Compared to other investments, gold is highly liquid and stays at a high value that increases in demand. When there’s a high demand, this means people can exchange their money for gold easily.
The high liquidity rate can be particularly important for businesses. If your company hits a cashflow crisis then it will be particularly important to have a portion of your investment portfolio that can be quickly accessed
No Specialised Knowledge Required
One of the beauties of trading in gold is that it is simple. It’s an ancient form of currency that has been traded for over 4000 years since it was discovered by the ancient Egyptians. Since then the world of finance has become ever more complex and remote. But gold is just the same.
Because there aren’t any special skills or qualifications to trade in gold, it is one of the easiest investment options out there. All you need to do is buy and trade. Check out the Physical Gold platform, which includes guides to investing in precious metals and transparent sales, purchase, and storage options.
Provides Privacy
Privacy is another advantage of investing in gold and other precious metals. This is because the precious metals investment process does not require the assistance of a third party. It is straightforward and can be conducted securely without external assistance. However, as a company asset, the value of the investment will need to be disclosed to your accountant and included in relevant financial statements.
Gold is Easy to Sell
Another reason why so many business owners choose to invest in gold is the need for a financial cushion. If you’re a small company, having an emergency fund is incredibly important. This can provide protection should a problem strike unexpectedly. Because gold is very easy to sell, you can rest assured you’ll make quick cash whenever you need it. When you’re financially secure and able to invest, knowing you’ve got the option to convert it into extra cash is a godsend and serves as a financial safety net.
Low Maintenance
As a hard-working business owner, we appreciate that you may not have lots of time on your hands. For small companies, in particular, you may have to wear several hats to get jobs done, from marketing your business to managing cash flow. If you choose to invest in gold, you’ll be happy to know there isn’t a lot of maintenance involved. This means you won’t have to keep a close eye on the market constantly. If you invest in physical gold, you will need to store it in a vault that comes with fees. But, the costs are relatively low, and you can be assured your assets are kept safe and secure.
Conclusion
Gold can be a safe haven in volatile times and it’s a highly liquid asset at any time. However, the price of gold can also go up and down in the short term and works better as part of a long-term investment portfolio. If you are considering this type of investment do your research and get expert advice. Remember to diversify and avoid putting all of your investment eggs in one basket. Not all of your eggs should be golden, but it may be prudent to have some gold in there.