In Part 1 we already discussed the role of gold as (1) a historical store of value, as (2) a successor in times of financial instability and (3) its increasing demand due to its scarcity.
This is Part 2 of our little selection of articles brought to you by the Vaultoro Media Team.
4. Increasing Demand
The increasing wealth of the emerging markets has boosted the demand for gold. In many of these countries, gold is integral to the culture. In China, where gold bars are a traditional form of saving, demand for gold remains strong. Same with India which is one of the largest consumers of gold in the world. It has many possible uses, e.g. jewellery and electronics. Thus, the Reserve Bank of India launched ‘Sovereign Gold Bonds’ (SGB) in 2015 to reduce the national demand of physical gold. Indian individuals can profit from SGB as it pays interest and is exempted from capital gains tax.
5. Portfolio Diversification
Financial advisers recommend at least a six month’ worth of expenses reserved in an insured deposit. With Vaultoro you can instantly cash out your gold savings, making it both a cash manager and a secure investment opportunity. In order to protect your assets and to maintain purchasing power, we believe that a portfolio should contain at least 15 to 25 percent of precious metals.
6. Political instability
With increasing political uncertainty, gold – as the ultimate crisis currency – is increasingly sought by investors as an anchor of security. For instance, Vaultoro had a massive gain in volume from Greek and Italian customers due to the ongoing European financial crisis.
The superiority of the gold standard consists in the fact that the value of gold develops independent of political actions. – Ludwig von Mises1
Appendix: How to invest in gold
Physical Gold delivery to your home is one of the cheapest and safest ways to store value in the long term. For short-term investments, Gold ETFs seems to be a reasonable asset class. However, it comes with a hefty management fee that extends up to 3% p.a. and there’s no guarantee that changes in ETF’s prices are the same as in gold.
vaultoro.com is the best solution both in price and security with allocated gold.
The gold is secured in the client’s name as their property, in top-tier vaults in Embrach, Switzerland. There’s no counterparty risk for the gold holdings. All gold is physically available, fully insured and audited.
The annual costs for physical gold storage are generally lower than for ETCs (approx. 1% management fee) or gold delivery (around 20-200 USD).
Start trading today and save your Bitcoin in Vaultoro’s gold storage!
- Von Mises, L. (2006). Causes of the Economic Crisis, The. Ludwig von Mises Institute. ↩