Why Buy Gold?
Gold is known around the world for having a rich history and a steady value. It plays an important role in many cultures for thousands of years, dating all the way back to around 800BC. People have always placed a heavy value on gold and it is the metal that most economies fall back on when traditional currency doesn’t work.
Here are 4 great reasons to buy gold, including gold jewelry.
4 Great Reasons to Buy Gold
1. Gold Has Consistent Value
While assets and paper currency can lose value, the value of gold has remained consistent and steady across time. It has always been seen as a way to preserve wealth across generations. People have always valued the unique properties of this precious metal. It doesn’t corrode and it can be melted over common flames, so it is easy to use for stamps and coins. It also has a beautiful unique color that sets it apart from all other elements.
2. The Weakening United States Dollar
The good old US dollar (USD) is still an important reserve currency but when the value of the dollar drops—as it did between 1998 and 2007—it causes people to fallback on the security of gold. This increased demand for gold increases the value of gold. The price of gold almost tripled in the period between 1998 and 2008, reaching a peak of $1,000 an ounce in 2008, almost doubling between 2008 and 2012 when it reached up to $1,900. When the USD goes down, the price of gold goes up. Simple physics.
3. Gold as a Hedge Against Inflation
Gold has always been a great way to hedge against inflation. The price of gold actually rises when living costs increase. Gold prices have continued to increase over the past 50 years, even while the stock market may go up and down. That’s because when fiat currency loses its purchasing power because of inflation, gold is priced in currency units and the price increases alongside other things. Gold is also seen as a great store of value, with people buying it when they feel that local currency could drop in value.
4. Gold is in Limited Supply
Most of the gold currently floating around the market since the 90s came from the bullion kept in the vaults of central banks. The selling of gold by banks slowed down in 2008. The production of new gold from gold mines has also been on the decline since 2000. Annual gold-mining output reportedly dropped from 2,573 metric tons in 2000 to 2,444 metric tons in 2007. It takes between 5 and 10 years to get a new mine into production too. This limitation on supply means that gold is worth more.
The Bottom Line?
Gold should be included in any kind of diverse investment portfolio. The price of gold increases in response to events that generally lower the price of paper investments like stocks. While gold prices can be volatile short-term, it always maintains value in the long-term. So pick up some gold to look good and at the same time, know that you’ve made a secure investment.