For hundreds of years, gold has fluctuated in importance as a monetary standard, but it has always remained important to investors. Gold has seen considerable increases in 2021, up to 0.66% since January, and CNBC reckon it might soon reach new highs. With cryptocurrencies becoming the noisy neighbor of cash assets, the role of gold and its importance has been in flux over the past year. However, signals in the financial and manufacturing worlds indicate that gold still has a big role to play in any beginner or serious portfolio.
As an investment option
For the stock market trader, gold has long been a good standard on which to build a portfolio. MarketWatch analysis shows that gold, while experiencing the same highs and lows as in any other stock market, continues to gain value over time as a solid foundation to any portfolio. Furthermore, industry experts Noble Gold investments have highlighted the increasing value of gold in the tech-driven society of today.
Increased consumption
The value of gold is derived from many sources, and it’s use as a ‘standard’ for international currencies is one such area that creates value. Consumption was historically for luxuries and certain scientific uses, but today, gold and other precious metals see widespread use in electronics. What’s more, much of this gold is new – according to the United Nations University, only 15% of the metal used in electronics construction is recovered. That means there’s a huge market for newly extracted gold products.
Rising inflation
Mining experts at Mining.com have noted how inflation pushes the gold price higher; the Wall Street Journal highlights that inflation is here to stay, and perhaps for many years. This is good news for gold prices – it will continue to push them higher, whereas indexes linked to areas such as real estate, which benefits from high interest rates and low inflation, fall. That’s good news for a gold portfolio, and when paired with the upward trend of gold in manufacturing will mean that the precious metal has some staying power in the modern stock market.
Buying gold, then, is once again a good option. Even with the dollar not tied to the gold standard, and fluctuating priorities within the forex market as a whole, gold remains useful. As manufacturing and inflation continue on an upward trend, the metal will only see more use.