According to investor and analyst Simon Popple, gold still has advantages, such as being a credible hedge against inflation, being scarce and finite, and having a relatively low correlation with other assets.
Maybe he oro It may not seem like the most exciting investment these days, but the precious metal could still deserve a place in your portfolio during these turbulent times, according to gold investor and analyst Simon Popple, CEO of Brookville Capital.
Gold is often considered a inflation hedge. This is because, as inflation eats up your dollars, the price of each ounce of gold also simultaneously increases in dollar terms, leaving you with a most valuable asset.
In recent months, several countries around the world have experienced a inflation high, interest rates and cost of living through the roofas well as a growing economic and geopolitical uncertainty. In such scenarios, investors have fled more towards precious metals such as gold and silver, due to their ability to hedge against inflation.
As Popple says, “Gold has been around for thousands of years and its value is recognized anywhere in the world. No matter what the social, political or financial climate, gold has never gone to zero or let an investor down.” It is the final form of money”.
Why is it still worth investing in gold?
Gold has a huge advantage over fiat currency, in that its quantities son finite, since countries cannot produce more gold than can be extracted. On the other hand, governments can print fiat currency at will, and overprinting often has disastrous consequences, such as hyperinflation.
Popple stresses: “We must remember that fiat currencies are essentially backed by the governments that issue them. The logic is compelling, but if too much money is printedpurchasing power decreases and invariably occurs inflationwhich causes the currency to lose value.”
“Imagine that you have a cake, no matter how many times you cut it: it doesn’t get any bigger!” adds Popple, who also stressed that print more money can function as a measure of monetary easing at firstbut sooner or later, almost always leads to higher inflation.
Another advantage of metal is its liquidity, since it is easily convertible into fiat currencies. Furthermore, gold is homogeneous across countries, while fiat currencies, properties and assets tend to vary significantly from country to country.
Gold also has a relatively low correlation with most other assets. On the other hand, very similar factors affect assets like stocks and bonds, which generally follow the same directions, in terms of market movements.
Popple notes: “One of the most notable characteristics of gold is its low correlation with traditional assets. This means that when other investments experience fluctuations during periods of stress, gold often moves in the opposite direction or remains relatively stable. This low correlation makes gold a effective tool to balance your portfolio.
“Adding it to your investment mix can reduce overall portfolio risk and increase stability.” Gold has also gained good results in times of high debtand Popple notes: “In times of rising debt (and I have yet to hear a compelling argument for why it will go down), gold has generally performed well.”
“Generally speaking, as debt has risen, gold appears to have followed. It is important to note that there have been times when debt has gone up, but gold has gone down. However, long-term (more than 10 years), it seems that gold has done well. “I like the idea of having exposure to something that could do well if the debt continues to increase,” she says.
“What I like about this is that if the split where my other investments are in has tanked, I can convert my gold into a different currency, or I can convert it back into the same currency if I so choose. That’s up to me. I like the idea of can choose“.
“For example, let’s say that the British pound has depreciated against several major currencies, such as the US dollar, the euro and the yuan. If I have part of my investments in gold, I don’t care what happens to the currencies, what I care is him gold price“.
Las gold investments can be done directlythrough gold bars, gold coins and jewelry, or indirectly, through gold exchange-traded funds and shares of gold mining companies. Often, first-time or beginner investors venturing into the gold market choose to invest in gold indirectly, in order to get a feel for the market before venturing deeper.
However, the gold It is not an interest-bearing asset.meaning that in a high interest rate environment, like most of the world currently finds itself in, investors may be a little hesitant to invest in gold.
When asked if he thinks investors would be willing to choose gold over other interest-bearing assets right now, Popple says: “I think everyone should have a diversified portfolio which should include gold. I firmly believe that the important thing is to ‘be in the market’ and not ‘timing the market’, so I would suggest getting into the market.”
“If people are worried about timing, they can always come in during a time frame“.
ADVERTISINGGold vs bitcoin: which seems to win?
In recent years, since the exponential rise of bitcoin, the cryptocurrency has also been seen as a hedge species against inflation, although some investors remain skepticsbecause cryptocurrencies are especially volatile.
As for his stance on the ongoing debate of gold versus bitcoin as a hedge against inflation, Popple believes that “gold has a history, while bitcoin does not. Personally, I prefer something shaped. “With how expensive bitcoin is, I don’t feel comfortable buying it now.”
“I know that the offer is limitedso the price has remained reasonably high, but countries like to control the money supply and, if there was ever a crisis, I think bitcoin could be a target, and perhaps ban its use,” he adds.
“That’s not to say I’m totally against it, but I would prefer to have my investments in gold first. If they’re all in place (and they’re not yet!) and I have some capital to spare, then having a little exposure to bitcoin It’s something I might consider, but gold is my priority“.
Disclaimer: This information does not constitute financial advice, always do your own research to make sure it’s right for your specific circumstances. Please also remember that we are a journalism website and our aim is to provide expert views and analysis. If you rely on the information on this page, you do so at your own risk.
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