When the dollar weakens and economic uncertainty looms, gold is often seen as a safe haven. A study conducted by researchers at Trinity College found that gold prices tend to rise 15 days after a market crash. This is because gold and stocks are negatively correlated; when one goes up, the other tends to go down. Gold is also known to benefit during financial hardship, while stocks tend to gain during periods of economic growth.
Selling stocks to finance a gold purchase is not recommended, as it is a panic-driven move. It can take years for stocks to regain their purchasing power after a major market decline. Gold has been used as an investment throughout history, and its value has remained relatively stable over time. Even if gold initially falls during a stock market crash, it should not be assumed that it has lost its value.
In the early 2000s, gold experienced an increase in value even as the stock market was in decline. Gold is an attractive investment option due to its stability and 0% return rate. People who have preserved their gold reserves during times of economic hardship have seen their investments pay off. If you think the stock market will crash in the coming years, investing in gold may be a wise decision.
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