Why gold is a safe bet for your investment portfolio

Something I have come to realise is that gold is one of the soundest investments that you can add to your portfolio.?

Until recently, investing in gold wasn’t something that I had much knowledge of. I had invested in gold mining companies in the past, but never in the precious metal itself.?

Speaking to a few mates who work in the mines and have become successful investors in their own right – highlighted to me the strength that gold possesses as an investment and that, over the past 35 years, it has consistently performed well, even in volatile markets. ?

Gold is the most popular precious metal you can invest in. Statistics show that as of December 2020, gold had one of the highest average trading volumes of any asset class, turning over more than 183 billion U.S. dollars daily.

The rate of return for gold investments fluctuated significantly during the period from 2002 to 2020 but generated positive returns in most years over that period. The return of gold as an investment reached almost 25 percent in 2020, and the?annual average price of gold ?has increased continuously since 2015.

Furthermore, as of December 2020, gold had an average 20-year return rate of 10.36 percent, making it one of the best performing assets over this time period. .

The future of investing in gold is looking good, too. As my friend Jordan Eliseo from The Perth Mint highlighted in a recent piece for Livewire , 38% of investors with an existing gold allocation are expected to increase their holding in the next 3 years vs. only 8% who think their exposure will decline.

Digging for gold

Digging into the industry led me to embark on a mission with The Perth Mint, Australia’s largest fully integrated, and most innovative precious metals enterprise, providing premium gold, silver and platinum products and services to markets throughout the world. They’re owned by the Government of Western Australia, making them the only government guaranteed precious metals investment and storage program in the world. What does that mean? It means that they’re extremely low risk.

In collaborating with The Perth Mint and after various conversations with some friends of mine, I have gone on my own investment journey, integrating gold into my portfolio and gathering a close-up view of its potential. So why gold?

Gold is a?play in both bull and bear markets. It’s got historical proof of showing consistent market growth and isn’t as volatile as other investments. It has shown a consistent trajectory over the past few decades in the stock market and is a hedge against inflation. In other words, it is a real, physical asset, and tends to hold its value. This can make it a more attractive investment proposition to intangible assets like cryptocurrencies, for example.?

Gold is also highly liquid, which means it can be easily converted into cash without having a significant impact on its value. Examples of liquid investments are cash, money market funds, and shares of publicly held companies that actively trade on an established stock exchange.

Perfect for any kind of investor

Gold is a sound investment for experienced?and new investors alike.?

For occasional or more novice investors, investing in gold can seem daunting, and there is a myth that you need to have vast sums of money to invest in it. But that’s just not the case.

Gold is, in fact, incredibly accessible. You can start with as little as $1 using an app like GoldPass which The Perth Mint offers. This allows investors to buy and sell gold which The Perth Mint store on their behalf. At any time, investors can redeem their holdings, and The Perth Mint will deliver the physical gold to them. It’s as simple as making any other online purchase.

For bull investors with a wide portfolio and deep investing experience, recognising the stability and potential of gold as an investment is worthwhile. I have been investing for decades but have only just started understanding gold’s full potential and how powerful an investment can be to compliment any portfolio – due to its consistent performance over time.?

If you already trade on the ASX then the easiest and best way to invest in gold is The Perth Mint’s gold ETF, which trades under the ASX code PMGOLD. You can buy and sell PMGOLD via your stockbroker or trading account.?

Anything but fool's gold

In the 1800’s the term “fool’s gold” was used as a nickname for pyrite?because of its deceptive resemblance to the precious metal. It is now commonly used to describe a scenario that is deceptively attractive but might not follow through in substance.?

Some investors, perhaps like me – felt just that about the precious metal itself. It has got the allure of something you feel you should invest in – but you just aren’t sure how sound an investment it would be.

Other investments like cryptocurrencies and riskier bets on the ASX often get more attention in the media, but gold’s unique quality is that it holds its value in even the most turbulent environments, and that is why it will continue to hold a place in my investment portfolio.

Disclaimer

Any opinions expressed in this article are subject to change without notice.

The information in this article and the links provided are for general information only and do not contain all information that may be material to you making an investment decision.

This article was produced as part of Mark Bouris' partnership with The Perth Mint.

The Perth Mint is not a financial adviser and nothing in this article constitutes financial, investment, legal, tax or other advice.?Before making an investment decision you should consider whether it is suitable for you in light of your investment profile, objectives, financial circumstances and the merits and risks.?