Topics: Is Gold Investment Safe and Valuable Nowadays

Gold has been widely used throughout the world as a vehicle for monetary exchange, it has a high value to mass ratio, that’s to say large amounts of money can be stored quite easily in the form of gold bullions. Many holders of gold store it in form of bullion coins or bars as a hedge against inflation or other economic disruptions.

gold bars-gold investment

gold bars-gold investment

Gold is a precious metal highly prized by many people and cultures, and has a history of being used as currency or some other form of money. It was only in 1971 when the Bretton Woods system ended that gold did not anymore get used as currency.

Even so, gold is still nowadays considered as a good, safe investment. Apart from the more common investments stocks, bank accounts, real estate, bonds, and mutual funds, many individuals and entities choose to invest in buying gold. Investing in gold is done for various reasons.

Gold, like other precious metals, is an asset that is both tangible and liquid. Tangibility of course refers to the fact that it has a physical presence that can be confirmed and sensed. Liquidity, on the other hand, refers to the ease with which a particular asset can be traded. For instance, stocks and bonds are liquid but not tangible, while a property of real estate is tangible but not liquid. These properties are what have made gold such a popular form of currency over the years.

The major advantage that gold possesses is a historically proven stability. What this means is that even through political and economic crises and fluctuations, gold has been seen to retain its value. This is because gold, being a tangible physical thing, is mostly independent of any particular political or economic climate.

Thus, one of the major reasons for investing in gold is to preserve assets and overall wealth. Because of this time tested stability, the value that is invested in gold is as stable and lasting as it is likely to get. Over the centuries, in fact, looking at the big picture, no other asset or investment can preserve wealth or value as well as gold can. Gold is thus often invested in as a hedge against declining currencies, inflation, or even political crises and financial instability. Gold provides a way for investors to protect their money against most causes of depreciation or even dissolution of investments.

On a related note, the value of gold is actually negatively correlated to that of stocks and bonds. This is because as economy becomes more unstable, the price of gold appreciates because of its relative stability. But in stable economies, gold slightly depreciates because it is an investment of low earnings as compared to others. So having investments in gold as well as in stocks can serve to diversify a portfolio, making it more resilient to any possible changes.

In addition, gold is a dense metal, meaning that a large amount of gold can be stored in a small amount of space, making storage and transport easy. Gold also has a high value to mass ratio, meaning that large amounts of money can be stored quite easily in the form of gold bullions. (Historically, the fact that gold is denser than some other metals has been used to verify if a particular item or coin is in fact solid gold.)

Gold is also a commodity, like silver or copper. This means that there is a market trading in these commodities that can be exploited by the savvy investor. By adhering to the principle of supply and demand, as well as being aware of the factors that affect the gold market, one can stand to make some money by buying and selling gold. At present, demand is beginning to increase faster than supply, as India and China demand more gold. China in particular has one of the most rapidly growing economies in the world, and is interested in converting a larger portion of its reserves into gold.

Gold retains its value over the centuries, and can serve to diversify any portfolio. It is easy to transport and store. Gold can also be treated as a high-value commodity to be traded in. In financial terms, then, gold, not diamonds, is forever.

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