“Gold is money, everything else is credit.” – JP Morgan
The famous financier and banker said this over a hundred years ago, and it’s still relevant today. The point is that the gold you possess has no counterparty risks; it doesn’t derive its value from anything or anywhere – never has, never will. JP Morgan had reasons to believe that gold will be the “last man standing” when everything else falls apart, and it will be standing tall.
Gold is a widely respected asset for its rich history and value, and it’s become an irreplaceable part of many cultures all over the world. For centuries, people have held gold for many reasons. It’s always been considered the thing we fall back on in times of uncertainty, even today in modern society and the new economy.
Without a doubt, gold is one of the most stable investments, with minimal risks involved. Have you ever wondered why that is? If so, continue to read to find out!
Gold preserves wealth
One important thing you should know is that gold retains value. This is why gold is so important in the modern economy and why it’s considered a stable investment – it has preserved wealth throughout thousands of generations, while the same cannot be said for paper-denominated currencies.
The thing about gold is that it has a constant nature. Although there is no exact constant in economics, it’s undeniable that the purchasing power of gold has been constant like no other currency ever.
It’s evident that times are unstable, and we can’t deny the political and economic situations’ incertitude. This is why many investors look at gold as a safe haven. Throughout history, many empires collapsed and crises occurred, and the only ones who were able to protect and retain their wealth were people who possessed gold.
Even with the uncertainty of the economic state, and with the convenience and popularity of electronic money on the rise, gold will continue to shine over the next few years, according to Pacific Precious Metals.
Unlike many investments (stocks, bonds, etc.) gold has intrinsic, tangible value, which is why many investors are a lot more confident in it than other commodities, and why they trust gold to protect their wealth when the economy is crumbling.
Diversify your investment portfolio
Gold has always been regarded as a valuable diversifying investment, regardless of inflation, the decline of the U.S. dollar, etc. If you think that stocks and bonds don’t provide enough diversity to your portfolio, you can always add a bit of gold, but you have to be careful about how much gold is enough.
Generally, your investment portfolio should be structured to help you reach long-term goals, and gold can be a great addition. However, many experts claim that you have to be wary of how much gold you should include. The general rule is that gold shouldn’t take up more than 5-10% of your portfolio. The exact percentage depends on your situation and risk tolerance.
A hedge against deflation/inflation
Saying that gold can be an excellent hedge against both inflation and deflation might sound a bit counterintuitive, but it’s true. Gold’s purchasing power has more chances of increasing during deflation than during inflation. This is the truth we have witnessed throughout history.
A period in which prices decrease, and the economy is burdened by excessive debt has not been seen globally since the Great Depression in the 1930s, although we’ve witnessed deflation to a small degree following the 2008 financial crisis.
During the Great Depression, the price of gold escalated quickly as other prices decreased sharply. This is because, at the time, people hoarded cash in the form of gold.
Right before the Great Recession, the price of gold had already been on the rise, and in 2008, as the stock market bottomed out, the price of gold kept rising, and it continued to do so even when the economy started to recover.
Gold is also seen as a hedge against inflation – when the cost of living increases, so does the price of gold. If you look at the last 50 years, the gold prices soared just as stock markets plunged during the high-inflation years. This is mostly because when fiat money loses its purchasing power due to inflation, gold is priced in that currency unit and tends to rise along with everything else. Furthermore, gold is considered a safe store of value so more people purchase it when they believe their local currency is losing value.
A wide range of options available
Now that you’re familiar with gold’s value, it’s time to choose what to invest in. The vast range of gold bullion coins, bars, and rounds from mints around the world means you have so many options from which you can choose.
If you’re interested in gold by the US mint, there are two most popular and precious coins they produce – the American Gold Eagle, and the American Gold Buffalo.
American Gold Eagle is undeniably one of the most famous and beautiful gold coins. It’s a 22 karat coin containing one troy ounce of fine gold. The observe design features Lady Liberty with the Capitol building in the background, and the reverse design has an American Bald Eagle carrying an olive branch.
American Gold Buffalo is an exceptional 24 karat bullion coin. The observe depicts a Native American, and the reverse shows an American Bison, more commonly referred to as buffalo.
Besides the US mint, there are coins from other prominent mints worldwide, including Canadian, Perth, South African, Chinese, Mexican, Austrian, the Royal mint, and the Royal Australian mint.
The Gold Maple Leaf by the Canadian mint is one of the most famous and in-demand gold coins globally. It’s the most sold gold coin globally, and its population is only surpassed by the Krugerrand – a gold coin named after the South African’s first president Paul Kruger, who is also featured on the observe, with South Africa’s symbol, the Springbok Gazelle on the reverse.
British Royal mint’s most alluring gold coin – the Britannia, features queen Elizabeth II, while the reverse depicts Britannia, a feminine figure that is the symbol and personification of Britain.
As for bars and rounds, you can find gold bars that weigh from 1 to 10 ounces and bars the size of 1 to 500 grams. Bars come from mints around the world, with different designs and levels of fineness.
Convenient ways to purchase
Purchasing gold has never been easier than it is in the 21st century. Today, you can even do it from the comfort of your home. All you need is a credit card, and you’re good to go. Not only is this convenient, but it’s also completely secure, thanks to the fully insured shipping.
If you’re more of a traditional buyer and want to touch your purchases, there are also physical brick and mortar stores where you can buy gold. By buying gold in person, you can witness how they test the gold for authenticity.
All in all, the most important thing when buying gold is trust. There are many dealers and many options, but nothing comes close to buying from a trusted dealer that will prove their gold value and authenticity in front of your eyes.
Whether you know all there is to know about gold, or you’re a novice to the world of gold, you must admit that investing in gold sounds like a top-notch idea, and you’re right. Just be careful who you trust to sell you the precious yellow metal.