The History of Investing in Gold
Gold has earned a rich and valuable history throughout the world. Coins containing gold were first seen in 800 BC. The first pure gold coin came about 300 years later. The value of gold coins has continued to increase and is one of the best investments in the world.
The Value
Gold maintains value as time passes. You may purchase gold to preserve and pass on your wealth to future generations.
Inflation
When the cost of living goes up, gold is your ideal investment against inflation. As inflation rises, so does the price of gold. For fifty years, the price of gold has increased along with inflation.
Deflation
When prices drop, the economy is left with excessive debt and the growth of businesses slow down. This is referred to as deflation. This is what occurred in the 1930s during the Great Depression. You may already know prices dropped at this time, but the price of gold soared.
The Increasing Demand for Gold
In the past, the demand for gold increased due to the boost in emerging market economies. In a lot of different countries, this caused the cultures to intertwine with gold. This was when India became one of the nations with the largest consumption of gold. Gold became invaluable for many different markets such as jewellery. The biggest demand for gold in India is in October because this is the traditional Indian wedding season. One of the most traditional ways to save in China is by purchasing gold. This demand has never wavered.
Diversifying the Portfolio
The best way to diversify is with investments separate from each other. Throughout history, gold has not been correlated with other types of investments such as stocks. During the 1970s, stocks plummeted while gold soared. By the 2000s, you were most likely still purchasing gold. Gold can decrease the risk and volatility of your portfolio.
Geopolitical Uncertainty
Gold does not lose value during financial uncertainty. This is the reason gold is referred to as the crisis commodity. You probably see gold as being safe because it outperforms the vast majority of other investments. The current crisis in the European Union led to an increase in the price of gold. When government confidence declines, the price of gold goes up. This includes purchasing gold coins from Goldstackers.
The Supply of Gold
Since the 1990s, the majority of the gold supply has been coming from the global central banks selling gold bullion. You may be aware this source significantly slowed in 2008. Since 2000, there has also been a drop in the amount of gold produced by the mines. It can take as long as a decade for new mine production to begin. As the available supply of gold decreases, the value of gold increases. There are also more investors demanding gold. They now see gold as an investment class and safe commodity. This has further increased the demand for gold while reducing the amount available.
The Bottom Line about Gold Investments
You should always make gold a part of your diversified investment portfolio. The events causing paper investments to decline including stocks and bonds, trigger a rise in the price of gold. Over the long term, gold has always maintained the value. As time has passed, gold has been successfully used as a hedge against inflation. As major currencies have lost value, gold has remained steady. This is an investment you should strongly consider.