Gold bought physically or digitally, can act as an insurance policy for the investor’s wealth. When the market crashes, if the stocks invested in by the investors are hit badly but he/she has a considerable amount of gold in his/her portfolio, then if gold follows historic trends, its value could rise.
Gold has historically been used as a hedge against inflation, and it continues to be part of the investment portfolio to mitigate financial risks during inflation, economic, social and geopolitical crises. According to the S&P index, gold performed well in 2020, delivering around 27 per cent in return.
Ashraf Rizvi, Founder and CEO, Digital Swiss Gold and Gilded, says “Gold offers a unique proposition in comparison to other financial assets – it tends to move higher when stocks are in steep decline. While the price of gold can rise in good times as the economy grows and people have jobs providing income to spend on jewellery or to save, it is the safety that gold has provided in times of trouble that enhances its place in investment portfolios over time.”
What makes Digital Gold a safe and profitable portfolio diversifier?
When investing in gold, experts say investors should look at the spot price of gold; it is the selling and buying price at the time of investing in gold. The spot price is quoted for every gram, ounce or kilo of gold. Gold investments help the investor spread risk that may arise from other assets such as shares, stocks, real estate or currencies that may not perform too well in a given time. Therefore, Rizvi says, “adding gold to your portfolio provides the much-needed cushion to your wealth in uncertain times and partially safeguard it from economic stress.”
Today, owing to COVID-19 restrictions and ensuing lockdown, experts say investors can buy gold digitally, which offers the same and even more cost benefits to the investors. As an investor, you get what you pay for, unlike in Gold jewellery which includes making charges, middlemen commission, storage costs, etc. Even at the time of liquidating it, the investor gets the full market price as no dealer expenses are owing to the digital platform. Digital gold offers investors control over their gold without the risk or inconvenience of ever leaving home.
How does digital gold help mitigate the potential for wealth to be eroded by extreme events?
Industry experts say, gold, bought physically or digitally, can act as an insurance policy for the investor’s wealth. Rizvi says, “When the market crashes, if the stocks invested in by the investors are hit badly but he/she has a considerable amount of gold in his/her portfolio, then if gold follows historic trends, its value could rise. This will ensure at least some wealth preservation.”
The global appeal of gold and international recognition further makes it a lucrative investment option. For instance, in the case of Digital Swiss Gold, Indians can invest in gold saved in Swiss vaults through their app, all while sitting right here in India. The gold offered on the platform can be bought and sold at the current market price. They also help buyers make sound decisions by showing a gold price movement in real-time on their app in both Indian and global currencies.
Rizvi says, “Looking at the general demand and supply of gold, the world’s gold production has not kept pace with demand for the yellow metal across countries. Therefore, gold will continue to remain a highly valuable and valued asset in the foreseeable future.” It’s all about making the right investment at the right time, and today, experts say digital gold platforms are offering investors the opportunity to diversify their portfolios to prevent any adverse impact of covid-19 like events on their wealth.