Last updated on August 24th, 2021 at 01:00 pm
In ten years, a dollar will not be worth the same amount of goods today. The money fluctuates, and anybody planning for retirement or who is already retired is concerned about running out of funds (read more). As the value of the dollar decreases annually, the cost of living also rises along with it. One thing to blame is inflation. Based on research, an inflation rate of one percent would result in a loss of $34,406 in retirement benefits.
That is why keeping inflation-hedge asset classes on your next investment game can help your portfolio drive when economic decline turns, like gold. While this investment does not generate earnings, many individual investors continue to hold it for several reasons. This investment has been utilized as a haven for wealth for millennia. It has a lengthy track record of holding its value, so you can expect it to do so in the future.
The Value
Gold has traditionally been regarded as a safe haven investment. For this reason, many people have turned to gold as an “alternative currency,” and most are keeping bullion in their IRAs through the best gold investment companies to keep the physical asset safe. Well, it is a tangible, physical asset that tends to hold its value over the long term.
When it comes to gold, you have an edge because it can be used for more than just currency and adornment. Unlike paper currency and investment accounts, the value of this remains constant and is unaffected by monetary regulations. In essence, we know that it is valuable because civilizations have adopted it, history has proven it, and its zero-counterparty risk has yet to be demonstrated.
You might wonder, it isn’t the only investment option, but why is it an excellent diversification tool? More than a hedge, there are several reasons why gold is considered a valuable commodity aside.
Early civilizations prized this precious yellow metal for its durability and mystique. It is a yellow metal, which was worshipped as a form of deity back then.
Although it is a naturally occurring element, it has been more valuable due to its scarcity. People who understand metals will know that this yellow metal is not as rare as you might think. But the difficulty of extracting gold has only served to enhance the perception of this metal as a valuable resource.
When compared to other metals, it has less production; thus, it is relatively expensive. Every year, the world’s above-ground gold reserves grow by roughly 3000 tons, according to estimates. Meanwhile, the annual silver production is estimated at around 27,000 tons. When compared, it is 9x higher. It’s clear that gold is much scarcer, which contributes to its high value.
When you own a bar of physical gold, you know that it will always be valued and will always be the same. The currency will not be exchanged for gold because money can fluctuate in value, but this metal does not.
Furthermore, its physical and chemical qualities alone make it extremely valuable. Due to scarcity, it is also very precious. The physical characteristics of this are numerous, allowing us to recognize and comprehend that it is a highly functional metal with thousands of applications, making it one of the world’s most treasured metals.
Before the introduction of paper money, this yellow metal has always played an essential role in the monetary system. At least on the scale that we see it today, the national government-backed currency is a relatively recent invention. For centuries, kings and governments would mint money (for example, stamping the king’s head on a coin). It would serve as a guarantee of the coin’s weight and purity (link: https://www.focus-economics.com/blog/gold-the-most-precious-of-metals).
Although gold as money has been taken over by the fiat currency, when the economy is down in a recession, a crisis, or even a war, people will take gold over a government currency that is inflating at any time of the day.
Currency values fluctuate— a gold coin, on the other hand, is always going to be a yellow metal coin, no matter what. In fact, many people today are investing in bullion coins. They are sold at a very premium price, and you can hold them for a long time. This will serve as a collectible item, but it can give you hefty returns when the market of this physical asset increases.
Gold has a wide range of applications and distinctive characteristics. It has long been prized in almost all human communities. It’s a versatile material that may be used as an electrical insulator, doesn’t rust, blends well with other metals, and is easy to form into wires or sheets. Because of these properties, it is the metal of choice for various industries, including economics, healthcare, and technological advancements.
Also, it is used to manufacture jewelry or as a component in advanced applications. In most cases, it is maintained by financial institutions or traded by investors. It has a unique, innate dazzling brilliance and glossy surface. As a result of these unique traits, gold makes its way into nearly every element of modern life in some beneficial way, shape, or form. It is undeniable that it has increased in value over time due to its usage.
