In today’s world, gold has long been recognized as a stable investment. But why is the price of gold so important for your portfolio? To gain expert insight, we spoke with Bojan Pravica, a renowned financial advisor and analyst, who shared his thoughts on this crucial question.
Bojan Pravica is a well-known financial advisor with many years of experience in investment and asset management. He graduated in economics and continued his career in various financial institutions, gaining a deep understanding of financial markets. His passion for financial market analysis has led him to become one of the most respected experts in the field.
The Role of Gold in an Investment Portfolio
Pravica explains that gold has a unique role in an investment portfolio. “Gold has been recognized for centuries as a safe haven during times of economic instability,” he says. “When markets face uncertainty, investors often seek gold as a means to preserve value.”
Journalist: How do you see the role of gold in modern investing?
Bojan Pravica: The role of gold in modern investing is multifaceted. Beyond its historical value as a hedge against inflation, gold today also serves as a safeguard against geopolitical risks and financial market volatility. Its unique property is that it is not tied to any single currency or economy, making it very attractive to global investors.
Journalist: What factors should investors consider when buying gold?
Bojan Pravica: When purchasing gold, it is important to understand the different forms of gold—ranging from physical gold in the form of bars and coins to financial instruments like gold ETFs. Each form has its advantages and disadvantages. Investors should also consider the costs of storing and securing physical gold, as well as the liquidity of individual investments.
Gold as a Hedge Against Inflation
One of the key reasons investors include gold in their portfolios is its role as a hedge against inflation. “Gold has a long history of preserving purchasing power,” says Pravica. “When the value of fiat currency falls due to inflation, the value of gold usually rises, meaning gold helps maintain asset value over time.”
Pravica also emphasizes the importance of diversification in investing. "Gold is not correlated with the movements of stock markets or bonds, which means it can act as an effective tool for reducing portfolio risk," he explains. "When stock markets decline, gold often behaves oppositely, helping to mitigate overall portfolio volatility."
Gold as a Global Currency
Gold also serves as a global currency, further enhancing its appeal to investors. “Gold is recognized and accepted worldwide,” says Pravica. “This means it is not exposed to the same currency risks as other investments, providing an additional layer of security and stability.”
Given all these factors, Pravica recommends that investors seriously consider including gold in their portfolios. “For the average investor, I would recommend having 5 to 10 percent of their portfolio in gold,” he says. “This is enough to provide the benefits of diversification and inflation protection without compromising the returns of the rest of the portfolio.”
Looking Ahead: Expectations for Gold Prices
Regarding future gold price movements, Pravica is optimistic. “Given the current economic conditions and geopolitical tensions, I expect demand for gold to remain strong,” he says.
"Central banks around the world continue to increase their gold reserves, indicating their confidence in gold as a store of value."
Journalist: How do you see the future of gold as an investment?
Bojan Pravica: The future of gold as an investment is bright. In the current economic environment, where interest rates are low and there is significant uncertainty about future economic growth, gold is likely to continue playing an important role in investors’ portfolios. Central banks worldwide continue to increase their gold reserves, which is a strong indicator of confidence in gold as a long-term store of value.
Our conversation with Bojan Pravica revealed why the price of gold is so important for an investment portfolio. His expertise and insight into financial markets clearly show that gold remains a key element of a successful investment strategy. With its ability to preserve value, protect against inflation, and reduce risk, gold offers unique advantages that are hard to find in other investments.
For anyone looking to protect their assets and achieve long-term financial stability, including gold in their portfolio is a smart decision.