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Gold £1245.61 £40.047
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Updated 12:08 28/02/21

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Gold vs Stocks


Investment in gold Stocks have long been seen as a popular investment method, offering high
potential returns, but with high risks attached. Investment Gold, however,
can offer a long-term, safer alternative. As a mixed portfolio especially, no
investor should overlook the opportunities of gold.

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Why Buy Gold?
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Gold is typically seen as a ‘safe-haven’- a lower risk asset that appeals to
investors in times of economic or political crisis when they are more
interested in investments that will protect their wealth rather than increase it.

Click here for more information about the benefits of gold as an investment asset.

In contrast, the stock markets are higher risk, higher yielding investment vehicles
that are based on the growth and success of the companies being floated.
Investors buy shares in certain companies, entitling them to a percentage of that
company’s profits. The better the performance of the company in question, the
more an investor will earn from their investment. This can be a great tool for
investors to put their money into assets that offer them a regular return and you
might hear success stories about those who have bought the right stocks at the
right times. However, for every success there is a failure and the possibility of
bankruptcy leaves investors vulnerable to the value of their stocks completely
disintegrating.

Investment in stock markets Furthermore, when we compare the growth of the FTSE and the gold price over
the last 20 years, there is plenty of reason to argue that gold is just as good an
investment for those looking to increase their wealth in the long run. Gold is best
seen as a long term investment and those who bought the precious metal 20
years ago and treated it as such will now be able to sell their investments for a
significant profit.

Click here to see the historical gold price.

A major strength of gold is that its value isn’t affected by inflation in the same way
that currencies are. An ounce of gold is always an ounce of gold. As the value of
money fluctuates, the amount needed to buy that same amount of gold will change.
As time goes on and fiat currencies become more and more inflated, gold’s value
increases.

Although it’s hard to guarantee anything in the world of economics, the devaluation of currency is something that seems almost inevitable, while precious metals have remained highly valuable for thousands of years. In the last century ever major currency has lost 97-99% of its value relative to gold, with the remaining 1-3% seemingly only a matter of time.

Crucially, such a decline in a currency can occur very quickly. In the last year, the pound has lost 43% against gold while the Argentinian Peso lost 99% in just 16 years. On the other hand, if you had held gold for that period of time, your assets would have appreciated in value by a huge amount. Even if they hadn’t, they would still be worth something. This is the key difference between paper investments and physical assets such as gold and silver.

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Related Links:

Is gold a safe investment? | Commodity Market | Gold as an investment

Gold investment guide | Is gold a safe investment? | Wealth protection

Gold price & interest rate relationship | Gold vs FTSE 100 | Gold vs ISAs