Today, savvy investors allocate 2 to 10 percent of their portfolios‘ value to gold-related assets. Examples include gold stocks or ETFs, physical gold, like Karatbars International’s CashGold product. Gold provides growth but is also a defensive play. In times of economic uncertainty, gold value increases. When recessions and other severe economic turmoil strike, wise investors rely on their gold allocations to balance declines in other assets.
Gold’s value increases during tough times because it is accepted for trade throughout the world. No matter where you are, gold commands the price you expect. Gold prices rise predictably. Its value increased during the recession years of 2008 and 2009 and again during the recent years of worldwide economic recovery.
Scarcity drives gold’s value consistently higher. Because gold must be mined and mines with significant quantities are very rare, there can never be a sudden increase in supply, as with other assets. Unlike the fiat currencies the governments of today produce, no government possesses the capability to simply print as much gold as they want.
Since the gold standard ended in 1973, governments have been printing currency to service their enormous debts. Average citizens pay for government largesse through taxes and the debasement of their currencies, which results from the constant creation of new money and debt. This is one reason why many people work harder and grow poorer. Smart investors know that those who hold gold retain the value of their portfolios.