Gold no longer backs the American dollar—or other global currencies, for that matter—and yet, it’s still critical to the world economy. Together, the reserves of financial institutions such as central banks, including the International Monetary Fund, hold about 20 percent of the world’s gold. Some central banks focus on adding to their current gold reserves.

Gold is still important to the contemporary economy because it has been preserved as a form of wealth for hundreds of generations. Paper currencies simply do not carry the same value over time. There are many reasons to invest in gold. When factors such as a declining American dollar and rising inflation are considered, gold can be thought of as a type of hedge against economic fluctuations. With inflation, gold tends to appreciate in value.

Amidst political tensions around the world, economic uncertainty has become the norm in the modern era. For this reason, gold is widely considered a safe haven during times of political or economic strife and uncertainty. Throughout history, empires and currencies have collapsed, while political coups have left nations unstable. But during these times, investors who were able  to hold onto gold were typically able to protect their wealth in the long-term, sometimes even using their gold to escape the turmoil. As a result, whenever there are world events that suggest some kind of instability, investors will often turn to gold.

In short, gold is a diversifying investment. That means that if you are worried about factors such as changing economic conditions, a declining American dollar, or inflation, gold is a solid investment. All things considered, gold is not correlated to the value of real estate, stocks, or bonds. There are many ways to own gold, which means that you can choose the type of gold investment that best suits your needs.

Investing in Commodities

Commodities are important parts of our day-to-day lives. They may be related to metals, energy, or food. For investors, they’re an important way to diversify that goes beyond traditional bonds, stocks, and mutual funds. Investors can stand to profit from commodities that they believe will increase in value.

Historically, most people did not invest in commodities. Doing so required a lot of energy, time, money, and expertise. But today, there are many ways to invest in commodities. Some of these routes are even accessible to the average investor. They include futures markets, stocks, exchange traded funds or exchange traded notes, mutual funds or index funds, and managed futures, Each type of commodity investment comes with various advantages and disadvantages.

The futures market, for instance, is one of the most popular ways to invest in commodities such as crude oil, natural gas, agricultural products, gold, or clean energy. You can invest in these commodities through a futures contract, which includes an agreement about the future purchase or sale of specific quantities of the commodity.

The bottom line is that both novice and experienced traders have a number of options to consider when it comes to investing in commodities. Though commodity futures contract are the most direct route, other types of investments can also help investors gain access to the market. The key is to choose the method that works best for you.