Sunday, 21 April 2013

Gold Does Not Predict the Performance of All Hard Assets


In the investment world all that glitters is apparently not gold. On April 15th, 2013 gold dropped in value more than 9 per cent, resulting in the biggest one-day fall, in 33 years. Moreover, some analysts believe it could drop an additional $100 in price per ounce, in the next 60 days. Needless to say, this has many gold investors worried and some are even panicking and rushing to sell-off their gold assets. The bottom line is that all investments carry a certain measure of risk and now it appears that gold is no exception.

Gold is considered to be a good hard asset investment for the most part, historically gaining in value decade after decade and most assuredly will continue that trend by the end of this decade, but right now, gold investors are advised to hold onto their investments; until the price goes up again over time. How long will it be is anyone’s guess at this point but it is inevitable. Time will tell. Until then, investors have to be patient and not panic and sell their gold assets. This could lead to a further drop in value and no gold investor wants that.

Gold is just one of the hard asset alternative investment opportunities available on the market today. Hard assets have always been considered to be less risky than traditional options such as stocks and bonds. They are not directly correlated with the stocks and bond markets and thus are not affected by inflation, in the same manner that traditional investments are. Hard assets are essentially the materials that are needed in the manufacturing of all the world’s consumer goods and transport requirements and have always been in strong demand as the global economy continues to grow, decade after decade. This is one main reason why these investments are so appealing to investors. In most instances, investors know that their investment is in an asset that is in constant demand worldwide and is expected to continue that way, for many years into the future.

Investing is all about  future speculation and the direction the global economy is growing. Yes, the price of gold is down at the moment, but many investors believe it will bounce-back again, in an even bigger way. Some analysts have predicted that the global economy will double in size by the year 2020 and in turn, the demand hard assets needed to facilitate the massive growth is also expected to double in size, as well. As you can imagine, these positive forecasts mean good news for anyone who has made an investment in hard assets.

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