The new year may be economically difficult; investing in gold may be prudent.
Many Americans are in the process of reevaluation as the new year approaches. If you’re one of them, you may be examining your finances, particularly what you’re investing in as a potential recession approaches.
Gold may be a wise investment decision for some this year, and for multiple reasons. Request a free asset protection kit from Goldco to learn more if you are one of the many Americans contemplating this unusual investment possibility.
Reasons to invest in gold in 2023
If you’re considering investing in gold in the new year, here are some potential benefits:
It is an effective hedge against inflation.
Gold and other precious metals have long been seen as an effective hedge against inflation. This is because, despite fluctuations in the dollar, it tends to maintain its value and your purchasing power over time.
As Battle Bank president Frank Trotter argues, “As inflation remains elevated through 2023, now may be a good time to raise gold allocations. Analysts have demonstrated over time that gold is an effective hedge against inflation.”
The Personal Consumer Expenditures (PCE) index tracks the costs of consumer goods and services in the United States. In 2022, the index hovered between 6% and 7%, far above the country’s historical norms. It was also far greater than the Federal Reserve’s target rate of 2%.
According to experts, the economy may not reach this level until 2025, or even later, making gold an even more attractive investment option for the new year.
“Based on recent economic data and the Fed’s stance, it seems improbable that the economy would improve in the near future. The situation is expected to worsen “Richard Gardner, chief executive officer of Modulus Global, a financial technology company, explains.
“The historic government spending in the form of stimulus during the shutdowns, a land war in Eastern Europe, and persisting supply chain concerns surrounding a resurgent Covid-19 make it likely that the economy will not recover in the foreseeable future. All of this bodes favorably for gold, given its past outperformance during inflationary periods.”
You can investigate your gold investing possibilities online or via the table below.
It can diversify your investment portfolio.
When an economy enters a recession, which Goldman Sachs estimates has a 35% likelihood of occurring next year, the stock market also declines. During a recession, real estate assets can also lose value.
During these times, gold can be an effective tool to diversify a portfolio, reduce exposure to riskier assets, and lessen the impact of losses.
“If investors anticipate a possible recession and possibly stagflation, reallocating into gold may be a prudent choice as they lower their exposure to equities and bonds,” adds Trotter.
It’s more liquid
In a recession, liquidity, or the ability to quickly convert assets into cash, is crucial. Then, if you experience economic hardship, you can sell these assets and still pay your bills and other essentials.
Investments that are illiquid include stocks, bonds, real estate, collectibles, and other tangible assets. They are difficult to convert into practical dollars, especially when demand for the things is low (who wants to buy rare art when they can’t pay their bills?)
Gold, on the other hand, is extremely liquid and can be readily swapped for cash, making it a prudent investment during recessions. According to Gardner, “Gold is a helpful asset to a portfolio due to its price stability and high liquidity.”
Positive for some but not others
To be clear, gold is a wise investment for some, but it is not the best choice for all. If enhancing the growth of your money is a priority, for instance, gold is generally not for you. Generally, gold is seen as a low-risk, safe-haven investment that does not generate large profits.
Consult with an investment professional or financial planner if you’re unsure if gold is the appropriate financial move for you, or if you need assistance purchasing gold. They can assist you make the best decision based on your objectives and risk tolerance.
»Reasons to invest in gold in 2023«