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Gold : an interesting alternative to protect your portfolio against inflation ?

The 18/05/2023 in "Financial news"

France's inflation rate has approached 6.2% and preliminary data on consumer prices clearly indicate a steady increase in prices. In this context, savers are inevitably losing money on the main traditional financial investments. Indeed, the pressure on bonds and shares is extremely strong.

However, there are alternatives to protect one's portfolio and cope with the galloping inflation, such as investing in physical gold

Gold : an anti-inflation shield? 

Historically, gold has always been considered the most remarkable and valuable metal. It is referred to as a safe haven because of the longevity of gold stocks around the world. In addition, the yellow metal is said to represent a symbol of economic stability. Indeed, the quote of gold does not devaluate in the event of a stock market crash, which is not the case for currencies that can be minted in large numbers and lose value.

The quote of gold also tends to rise with inflation as it generally follows the rising cost of living. Investing in assets whose prices rise in times of crisis mechanically protects one's portfolio against a possible recession. Thus, periods of inflation or recession are characterised by favourable conditions for the price of precious metals.

Furthermore, investing in a long-term asset like gold would allow you to finance your savings in a precious metal. This would make gold a favourable investment for growing your capital.

The future of the precious metal in the global money market

In these difficult economic times, which are already upon us and are likely to continue for a long time, the history of gold shows that its attractiveness does not need to be proven. As a result, while stock markets have collapsed, the price of gold has remained relatively stable. Central banks have been investing heavily to increase their physical gold reserves.

Buying gold would therefore allow you to rely on a long-term safe haven, so acquiring yellow metal in times of crisis would be a feasible monetary option.

Moreover, there is a necessary link between restrictive monetary policy and the price of gold. Central banks would therefore have a powerful "treasure trove" of gold reserves, and these reserves continue to grow. Thus, as geopolitical tensions intensify, the demand for the yellow metal by Central Banks increases.

As a result, gold would represent a significant intrinsic value compared to investing in stocks or bonds, so it would allow you to hedge against inflation and grow your asset portfolio.

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