Gold is a constant in the world of investing; the precious metal is extremely unique in that it is an asset recognized across the globe, its roots of value going back to 1600 BC. Terms like “the gold standard” are used daily, referencing systems put in place that measured the value of a country’s currency on fixed amounts of gold. Investing in gold gives your portfolio a security and diversification that cannot be as easily reached with other investments. If you’re entertaining the idea of investing in gold, allow us to share some nuggets of valuable information that could give you the validation you’re looking for.
Standing the Test of Time
The association we make between gold and worth are deeply seated in our brains, a subconscious reflex that lends itself to the historical credibility of the metal. One of the first known uses of gold was found in gravesites dating back to 4600 BC in Bulgaria. Some individual’s graves were overflowing with gold artifacts while others were sparse or contained none of the metal at all. This discovery indicated two things: 1. Early civilizations found inherent value in gold, it was elite enough of a commodity to be buried with 2. It was relied on it to reflect status and to create financial power structures.
Our concept of gold has not evolved over time, but rather has become even more solidified in nature. As the metal began to develop into a form of currency, royal institutions stamped their symbols on coins, creating the early roots of a government-backed asset. Coinage became a standardized method of exchange and gold was thought of as a top-level currency. Looking back at the origin of notorious historical conquests, we can see gold was a key motivation; across the Americas, Asia, and Africa, gold’s value remained concrete and indicated a level of power and prestige. This set the stage for how our societies would view gold throughout time, even in the context of the present day.
Purchasing Power, Protected
Gold famously serves as a hedge against inflation. Investing in gold is a financially sound move many individuals take to ensure their assets are protected. The price of the precious metal typically rises as the cost of living does, with gold prices skyrocketing during times of stock market devastation. When money loses value as a result of inflation, gold does not, and instead increases in worth alongside the market. Investing in gold also serves as a protection during times of deflation, as people hold tight to their cash in the face of uncertainty. Historically, like during the Great Depression, many individuals found the best way to do this was holding funds in gold and gold coin.
Being as it is a physical stock, tangible and unchanging, gold is inevitably a powerhouse of value. Investing in gold eliminates many of the risks we see with fiat and digital currency. The unpredictability of the economy, and world at large, is almost always directly reflected in our investments. Gold’s reliability does not wane nearly as severely as other investments do. Its steady, static nature allows investors to put their mind at ease when panic ensues on the financial front. The lower risk of gold offers a long-term safe haven for those looking to protect and preserve the value of their wealth as it will always hold a significant value no matter what. Put simply: Gold is not a trend, it is not Bitcoin or Cryptocurrency, it is a highly revered investment that doesn’t look like it’s going anywhere soon.
A Predictable Precious Metal
People who choose to invest and pay close attention to their financial portfolios often wonder about the future of their investments. During times of political and social unrest, people turn to gold as a safety-net and sure thing. The precious metal is often called a “crisis commodity” in that it gives individuals a sense of foundational security in the midst of rising tension. We saw the most recent example of this come to life during the Coronavirus outbreak. In 2020, gold surged in popularity and reached its highest price in 7 years. Gold’s finite supply also has always bolstered its worth, but as mines were impacted by COVID-19 mandates, the precious metal’s value was boosted even more.
In addition to serving as a safe haven for investors, investing in gold is a proven way to diversify your portfolio. Investors should work to have a well-rounded line of assets and investments to ensure they never “lose it all”. The most effective way to diversify a portfolio is to search for investments that have little to no relation to one another; financial security can be established by having a good balance of stocks, bonds, and assets like gold. Gold’s value typically moves in the opposite direction of government-backed currency, giving it steady purchasing power and an anchoring effect. Gold serves as the “long-term commitment” in a portfolio full of short-term successes.
Heavy Metal: Weighing the Pros of Gold
Warren Buffet once said that ,“Gold is a way of going long on fear”. This statement succinctly summarizes why your future self will thank you for choosing to invest in gold. The immediate, instant gratification we have all grown accustomed to is not part of gold’s repertoire. Investing in gold is a proactive and responsible financial move that will alleviate classical stressors involved in the process. Like gold itself, London Gold Xchange values consistency and reliability. Our direct relationship with refiners allows us to undercut competition while staying in the know when it comes to changes in the market. Most investments encourage you to take a risk, to bite the bullet and see what comes next; investing in gold is the antithesis of that action.
