Making Gold Investments in 2022
The market price of gold saw a stellar increase in the year 2020 but suffered a marginal 4 percent loss by the end of 2021, finishing the year at 1,806 US dollars per ounce. The market readers see the drop as a temporary setback and expect the gold prices to boom in 2022. Regardless of what’s to come, investing in gold is always a good step towards diversifying an investment portfolio and holding a hedge against a crumbling stock market.
History of Gold Investment
Since the beginning of the stock market, gold has been thought to have an adverse correlation with stock markets and a positive association with inflation.
Though the precious metal commodity has been in the market for a long time, its market price remained stagnant until the crisis of the early 2000s, when gold prices saw an unprecedented boost of up to 214 percent, taking the value to an all-time high.
The general interest in gold as an investment didn’t stop after this, and more investors began to see it as a safe option to counter the uncertainties of the stock market.
Why Invest in Gold?
There may be several reasons for an investor to dedicate a fair portion of their portfolio to investing in precious metals such as gold. Following are a few of these reasons:
As an investor, your safest bet is not to put all your eggs in one basket. This is why investors like to diversify their investments as protection at times of failure. Gold is often inversely linked to the stock markets.
This is why this precious metal is frequently included as a diversification asset in a well-balanced portfolio. Investors can decrease volatility and risk by broadening their investment portfolios.
Gold prices frequently rise in combination with increasing inflation and a weakening currency. As a result, when investors understand they are losing money, they may attempt to acquire the metal as a safeguard asset. This is consistent with the general rule that gold grows in value when the dollar declines.
According to various studies, the dollar may not be as strong in 2022 as it previously has been, so placing your bet on gold might be the best investment plan for the New Year.
Humans control the demand, production, and supply of gold. The scarcity of this precious metal makes it a safe investment for investors. Gold is unaffected by changes in interest rates as well. It’s a rare asset that has held its value through time and has demonstrated its usefulness in the case of a downturn in the economy.
Factors Impacting Gold in 2022
We’ve listed some reasons why gold might be worth investing in, in 2022.
- Higher global inflation rate due to the pandemic
- Dollar losing its value
- Market volatility due to geopolitical issues
- Increase in demand for manufacturing sectors