We talked in the last article of gold, one of the best investments you can make. But why is it so important? Gold is used as a hedge against currency fluctuations, particularly the U.S. dollar. If the dollar were to appreciate, the price of gold usually falls. In contrast, in those moments when the dollar is weak, the price of gold tends to rise. Basically, gold and the dollar have a pattern that is inversely proportional. For this reason, gold has always proven to be one of the most effective resources in protecting the market against the weakness of the dollar.
The ‘gold is significantly less volatile than most commodities and other indices. It tends to behave more like a coin. Assets with low volatility help reduce the overall risk of the portfolio of an investor, adding a beneficial effect on the expected returns. Gold helps to manage risk more effectively and allows you to fight back against negative events.
Gold prices also shifts the balance of supply and demand. Given the long time of extraction of this precious metal, gold production is relatively inelastic, regardless of increases in demand. That is why the rally in the gold price since 2001 has generated a significant increase in production levels.
Demand for gold has shown very strong growth recently, due in part to rising income levels in key markets. All these factors of supply and demand have laid the foundations for a positive outlook towards gold.
If you decide you want to invest in gold, the various forex brokers on the market today usually allow you to do so. In the commodities section of your trading platform, in fact, all you have to invest in various precious metals.