Gold Trading Basics – Is Gold A Good Hedge Against Inflation?
Today I’m going to cover some gold trading basics. Do you know what is a good hedge against inflation? Hedging takes place when changes in an asset’s returns systematically offset changes in the general price level for a particular country. As you know in recent times, real assets such as gold and silver as well as real estate have shown a steady growth rate. These assets are able to keep up with the 2 to 3 percent in annual inflation rate.
In fact, gold prices have steadily risen and this has provided investors with 190 percent return over 20 years. Although gold prices are denominated in U.S dollar, the purchasing power of the dollar has actually decreased about 35 percent over the same 20 years period.
Nowadays, gold has caught the interest of U.S investors. Those some gold trading basics in hand are able to leverage on the power of online gold trading. Others who are unfamiliar to trade gold online purchase physical gold. These gold traders and investors are worried that the massive fiscal and monetary stimulus packages unleashed by the US government in response to the 2008 – 2009 financial crisis may trigger high inflation.
In addition, precious metals like gold can be bought easily and only need smaller investment capital as compared to real estate. It is believed that adding gold to a diversified portfolio of bond and stock can provide lower volatility and higher overall return.
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