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Home / News / Investing in gold – a good idea or will it lose its shine?

Investing in gold – a good idea or will it lose its shine?
22.10.2012

It’s a reasonable question: is gold a good investment option or not? There are two sides of the argument, so let’s have a look at the potential pros and cons.

Gold is often lauded as an investment ‘safe haven’ in times of economical turmoil. As part of an investment portfolio, gold can offer a good diversification compared with the usual investment asset classes of cash, bonds and equities. In order to maintain a strong, balanced portfolio, many experts recommend holding between 1% and 5% of an allocation in gold.

We are all very much aware of the uncertain financial climate at the moment, with falling currencies considered valueless; in such times, gold is seen as an insurance against these issues.

The changing value of gold

On the flip side however, despite its many advantages, gold doesn’t earn you an income and is unlikely to protect you against inflation, unlike shares. It’s also worth remembering that gold has long cycles; from 1982 to 2002 it represented very poor value, reaching its height at just $318 per ounce. Conversely, in September 2012 gold had reached a high value of $1700 per ounce – the real question to ask is how long will it be before it reverts to its mean value? And what impact would that have on the overall value of your portfolio?

Objective advice on investments

When trying to create an investment portfolio it can be hard to make decisions due to the pros and cons of various assets such as we’ve demonstrated here with gold. Here at Guardian Wealth Management, we pride ourselves on offering independent and unbiased advice.

We are able to design fully diversified portfolios, created for each individual on a bespoke basis, based on their attitude to risk and return. As part of our service, we will provide a no-fee yearly review of your portfolio and will be in regular contact with you to ensure that we maximise the current market trends and ensure that your investment reaches its true potential.

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