Whether we like it or not, gold is considered as an inflation hedge – a very reliable measurement of protection against the risk of purchasing power. Although, this precious metal may not be an excellent option for that purpose. Some investors fail to consider the volatility of gold, as well as the opportunity cost of owning one, while some fail to anticipate its storage needs and other logistical difficulties of owning this metal. For these reasons, some still view United States Treasury bills as a superior safety net alternative to this precious metal. In this article, we will take a closer look at the advantage of owning gold.
As of the moment, it has fared a lot better compared to palladium, platinum, silver, and other precious metals. After hitting more or less $2,000 per ounce in 2011, it has bottomed out at around $1,200 an ounce for the past years. Just last year, it rises to $1,300 per ounce before settling to $1,700 an ounce as of today.
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Its rise this year is partially due to this metal’s formidable defense against the weakening value of fiat money or paper currency. But in light of the trajectory, a lot of investors believe that its future performance will still experience ups and downs, mostly ups because of what is happening in today’s world (the pandemic and political tension around the globe).