all investments carry risk

Does Gold’s Performance Directly Affect Other Hard Assets?

Posted on Posted in Alternative Investments

On April 15th, 2013 gold experienced its biggest one-day fall in 33 years. The stunned international investment community watched the leading precious metal lose 9 percent of its value. This came as a shocking reminder to novice and experienced investors alike: All investments carry a certain measure of risk. Gold has proven once again that it is no exception to this rule.

For many years, gold has been considered to be a dependable hard asset investment. Historically it has increased in value decade after decade, and some say it could return to that trend by 2020. However for the immediate future, investors will either have to hold onto their gold investments until the price goes up again, or if possible; avoid investing in gold altogether. That said, gold is just one of the many hard asset investment opportunities available in the market today and its performance does not affect some of my favorite investment choices.

Aside from gold, hard assets like shipping container investments have always been considered less risky than traditional options, such as stocks, bonds and even well-established alternatives like real estate investing. As a matter of fact, many investors favor them because they are not directly correlated with the stocks and bond markets and thus are not affected by things like inflation, in the same way that traditional investments are. Because hard assets are comprised of the materials that are needed in the manufacturing of all the world’s consumer goods and transport requirements, and thus have always been in strong demand to facilitate the steady growth of the global economy; decade after decade. It is because of this that 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, resulting in long-term investment success.

The truth be told, much of deciding which investment to choose is about speculating which direction the global economy will take. Yes, the price of gold is down at the moment, but many investors believe it will bounce-back again. Some believe it will make a comeback in an even bigger way. In fact, there are a few market analysts that have predicted the global economy will double in size by the year 2020 and in turn, the demand for hard assets (like gold) will rise to facilitate the world’s massive growth. As you can imagine, these positive forecasts mean good news for anyone who has made an investment in a hard asset, whether it be the likes of precious metals, gemstones or cargo containers.