There are several ways to have a gold investment, from ETFs to buying its physical form, buying stocks in mining companies, and so on. People that invest in this precious metal have several reasons for doing it. Let’s see if investing in gold is a wise investment choice.
You can take a look at this United Gold Direct review to learn more about the various ways of investing in this precious metal. However, there have been arguments by some persons that this metal is a relic item (some even go as calling it barbaric), and that it no more has the financial qualities that it did before. In our current economic world, paper money is the choice currency. People contend that the only benefit this metal hold is we still use it to make jewelry.
Meanwhile, others argue that gold holds several basic features. These features make it a necessary and unique investment that every investor should have in their portfolio. But which of these arguments is right? In this article, we will discuss this precious metal and see if it is still a wise and profitable investment choice.
Gold – A Short History
For us to fully comprehend the use of this precious metal, we have to first take a walk down history to see when this metal was first introduced as what it is now. Gold’s history dates back to far 2000 B.C during which ancient Egyptians began using it to craft jewelry.
But, it was about 560 B.C people started using it for money. During this time, merchants needed to make standard money that would not only be standardized but could be easily transferred so that trade can be simplified. The answer to the need was gold coins which were sealed and stamped. This was seen as the perfect choice since gold jewelry was already recognized and widely accepted everywhere.
Since it became an acceptable form of money, it wasn’t long before its importance started growing and spreading throughout the United Kingdom and Europe.
The Modern Economy and Gold
In current times, this metal does not back the United States Dollar (or even other currencies around the globe) anymore. Despite this, it still holds relevance in our society and is also still relevant to the economy globally.
One thing that can validate this is the financial organizations like the International Monetary Fund, and Central Banks balance sheets. These financial organizations hold nearly one-fifth percent of the entire world’s already mimed gold supply. You can visit here to find out more about what a central bank is all about. To further buttress this point, some of these central banks added more gold to their current reserves.
Gold is a Preserver of Wealth
The relevance of this metal in our current economy is chiefly because it has been a successful preserver of wealth throughout many generations. We cannot say the same for paper currencies. To help us put things better into perspectives, let us consider this example:
During the early 70s, this precious metal was valued at 35 dollars for an ounce. Assuming you had the option of either keeping your 35 dollars or holding its equivalent for gold (an ounce). During that time, you can purchase the same thing with both of them; let us say a fancy new dress or suit.
But, if you converted that same quantity of gold in today’s economy, you could still get a fancy new dress or suit with it. However, you cannot get that same item for 35 dollars today. In fact, you would lose a great amount if you had decided to keep the 35 dollars instead of the metal. This is because gold’s value has increased, but the dollar’s value eroded due to inflation.
A Safe Haven
Tensions across the globe have only been getting more and more common. These have made it obvious that economic and political unrest is a reality in today’s economic atmosphere. Due to this, a lot of investors now consider this precious metal as a haven during these uncertain times.
Why? When you look back in time, you will find several collapsed empires, currencies, and political coups. During these uncertain times, those who invested in gold kept their wealth; they even used this metal as a means to escape the unrest.
So, when events occur and they hint at any form of global economic meltdown, investors will choose to get this metal as a haven.
Gold is an Asset that pays its Holder Dividends
Getting gold stocks is a venture most growth investors find very appealing. You can visit https://marketbusinessnews.com/financial-glossary/growth-investing/ to learn more about growth investing. These stocks typically rise or fall with gold’s price, although some mining companies remain profitable despite the metal’s price.
A little increase in price can create a massive gain for investors who hold these stocks. These investors will typically get more ROI than those who simply own the metal’s physical form.
You can leverage this by buying the stocks of companies that have a strong history of good dividend performance.
Gold Has a Hedge over Dollar
As we already said, this precious metal is a preserver of wealth. This fact is made even more vital in this economic environment because investors are regularly faced with the issue of inflation and a decline in dollars.
This is because, historically, this metal has provided a hedge over these situations. When there is rising inflation, the value of the metal appreciates. A good example of this is the 1970s.
From all that has been discussed so far, gold investment is still a wise investment. However, there are also certain disadvantages attached to it.
Therefore, it would be proper to do your findings of what is going on in the market before you invest. The method of investment should be based on what you wish to achieve from the investment. For example, if you want it for its hedge against inflation, we recommend you invest in gold bullion and coins.
Contrary to the opinion hold by some persons, a gold investment still qualifies as a wise investment plan. Investing in this precious metal offers you so many benefits. However, there are still some disadvantages. So, before you invest, make sure it is not a bad time in the market.