Gold has been one of the world’s most popular investments since it began to be traded centuries ago. It has a has a volatile market that is open to speculation just like Forex or any other. Out of all of the precious metals used as investments, gold has always remained the strongest and most effective. Today we are going to get into why to invest in gold and it’s benefits.
Is Gold A Good Investment?
To put it simply, yes. Gold is a wonderful investment for experienced or new investors alike. The first gold coins appeared around 800 B.C and a few hundred years later again in the Kingdom of Lydia. Even until today, gold has the benefits of:
- Consistency: Unlike other precious metals, paper currencies and certain assets, gold has kept its value over the years. It has proven itself to be a worthwhile investment due to its history and is one of the reasons it’s passed on to new generations.
- Strength: During 1998 to 2008 when the US dollar started to fall against other major currencies, what did many people do? They began investing into gold because it appeared as a more trustworthy alternative. The price of gold tripled during this time and doubled again during 2008 to 2012. When times get tough, people look to gold. Holding onto some is wise and not just in the sense of security, but rather you might own gold when the price skyrockets.
- Anti-inflation: Gold has had a great history of being a valuable tool in hedging inflation. Typically as the cost of living increases, so does gold.
- Anti-deflation: Just like the economy may inflate, it can also do the opposite. When deflation occurs, gold has a much higher purchasing power like it during the Great Depression for example.
- Trust: In times when confidence in a countries government or economy may be low due to geo/sociopolitical issues, gold tends to increase. It has been coined a crisis commodity because it is the first investment many people turn to in hard times and uncertainty
- Supply: Central banks have vaults containing gold bullion which from the 1990’s has accounted for most of the markets supply. Since 2000, gold mining and the production of new mining sites began to slow down. What does this mean? gold is becoming an even more rare item than it already is. If you understand basic economics, you know that if supply decreases then the price goes up. Purchasing gold now can yield a very favorable return on investment down the road.
- Diversification: Any investor knows that diversity is key in your portfolio. As the old saying goes, “Don’t put all of your eggs into one basket”. Imagine putting all of your money into a single investment and it goes south. You’ll be very happy when your money is spread across many assets, especially one as reliable and profitable as gold.
What Data Says About Gold
This graph above displays over 50 years of the price of gold. As you can see, starting in 2000 to 2005, the precious metal had seen a very steady increase and in 2013 had a slight dip but has been increasing again. Despite this little fall, gold still remains at one of its strongest times in history.
The price per gram has also been steadily increasing as well which we can see in the above graph. Ever since the early 2000’s, its price has been steadily going up and looks to only be continuing doing so.
One last graph before we conclude. This one depicts the troy ounce price from 1914 to 2017, a bit over an entire century. The lines itself do all the talking here, showing golds history of rising in price while staying consistent and strong.
If you’ve asked yourself “Is gold a good investment?”, we are here to tell you it is very much so indeed. The wonderful part of gold is you can buy it in small amounts or very large amounts depending on your capital. Either way you will be able to reap the benefits of this precious metal.