If you examine history carefully, gold is one of the major forms of investment that many nations around the world embrace with open arms. It is no longer the currency like it used to be, but people continue to stash gold in their homes, banks and safe places as much as possible believing its value can only grow in the future. This is mostly true because gold has given promising returns to long-term investors. However, is gold a really solid investment strategy like some experts claim to be? Let us find out.
History of Gold
Gold, as a currency and investment, is believed to have been used as far back as 1,500 years ago by the Byzantine Empire. It is still attractive to investors these days given the fact that other strategies such as stocks and commodities are prone to volatility in a big way.
Particularly in a bear market, gold can add good value to anyone’s otherwise dull portfolio. In fact, experts in investments see the future of gold as something that has the power to replace a currency.
The enticing factor of gold is evident in the 1944 agreement when the U.S. dollar replaced gold as a global currency yet people continued to use it as a back-up for trading.
When the gold standard was removed in the U.S, the rest of the world followed, but the desire to acquire more gold is still in the heart of many experienced investors.
Gold remains as a popular investment for a wide range of reasons. For one thing, it is a form of currency that can be converted into cash anywhere and anytime thus holding its value intact. In other words, nothing can be compared to the liquidity that gold has. Gold has the ability to hold its value for the long haul as well. Even if the market sees a crash in gold price from time to time, economists believe that its underlying value never decreases or changes much in any given period. This means that it is highly likely that the gold you own will retain its value in a down market than the house you live in because of the flexibility it offers. There is also a fixed quality of gold in the world which makes it a precious element unlike other commodities. And contrary to dollar or paper currency, gold holds inherent value in itself.
Inflation and Gold
Gold is a stable form of investment even when inflation takes hold of the market. This means, when a currency deteriorates, especially during inflation, gold can stay the same or increase in price to counter-balance the market.
This investment strategy is mostly used when investors want to diversify their portfolios. For example, when currency dips, gold price may increase due to inflation, thus providing a safe cushion to investors.
To put it in simple words, invest in commodities like gold bullion. You can buy gold in Adelaide without hassle or from similar gold bullion companies around your local area. Not many investments are as universal as investing in gold, and majority of other investment strategies such as treasuries, bonds and securities around the world are influenced by politics and other factors.
For this and other reasons, people consider gold as a safe investment. Of course, there are many other uses of gold in the market, not just as an investment haven. Today’s gold is seen everywhere from watches and jewellery to monuments. People see possessing gold as a status symbol which is why it is used in clothing and accessories as well.
In essence, gold as investment has been one of the top strategies in the world for many years. If you have other thoughts about gold investment that you’d like to share, feel free to share it to us in the comments.