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No matter what the economy is doing, gold can be a valuable part of your investment portfolio. Tetra Images
Gold has always been popular but 2023 has been a largely banner year for the precious metal. Persistent inflation and elevated interest rates have many looking for safe places to put their investing dollars, leading many to turn to gold. Gold is a great investment in times of economic trouble, thanks to its steady value, reliable returns and high liquidity.
But it’s not just helpful when the news is grim. It’s a smart addition to your portfolio at any time. Explore your gold investing options by requesting a free information kit today.
Why gold is a smart investment in any economy
Whether the economy is up or down, gold is worth considering. Here are three reasons why.
It’s a hedge against inflation
Gold can protect your money in times of inflation. As interest rates rise, gold prices often rise with them.
For example, in the beginning of the 1970s, the federal funds rate averaged 8.98%, according to the Federal Reserve Bank of St. Louis. By January 1980, it was up to 13.82%. During that period, gold prices rose from $35 per share to a whopping $850 per share, according to NASDAQ data.
Other investments, such as stocks, don’t often fare as well during inflationary period. For example, between October 2007, and March 2009, the S&P 500 index fell by 56.8%, according to data from GoldSilver. Meanwhile, gold went up by 25.5% in the same time.
During times of economic uncertainty and persistent inflation, diversification is key to safeguarding your portfolio from significant losses. While more volatile assets like stocks have the potential for high returns, gold can provide a counterbalance when they stumble. Experts recommend keeping 5% to 10% of your portfolio in gold for this reason.
Its value can rise in a recession
Gold can be a safe haven for your money in a recession. Gold prices have historically increased the weaker the economy becomes.
Consider the release of the Fed’s March minutes as an example. After the news that the Fed expected a