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Should You Invest in Gold with Gold Companies?

by Aishwarya
Should You Invest in Gold with Gold Companies?

Some people argue that gold is only a shadow of its former self. They argue that the metal is not as valuable as it used to be when it backed most currencies. However, another group of people seems to believe that this precious ornament remains an asset that investors should add to their portfolios.

A Quick Look at Gold’s History

For us to fully understand the place of this metal in the economy today, we must examine how it got to become so valuable. The Egyptians were the first to put this metal to good use as it had several attractive physical properties. Back in 2000 B.C, ancient Egyptians began forming jewelry from gold and people began to attach more value to it. However, it was not until 560 B.C, that the metal began to serve as a means of exchange, a currency. Click here to learn more about why gold is used in jewelry making. 

At the time, there was a need for a standardized and globally accepted currency that would help simplify trade. This gave birth to the use of gold coins stamped with the seal of leaders or the various governments at the time. There were no objections to this development as the metal was already widely recognized and accepted throughout the earth. 

Since becoming a globally accepted currency, it was not long before people began to associate this metal with wealth and affluence. In 775, Great Britain created its metals-based currency with the pound, shillings, and pence based on the amount of gold or silver it represented. 

In 1792, the U.S established a bimetallic standard which stated that every monetary unit in the country must be backed by either of the two most precious metals, gold, or silver. What this meant was that the money in circulation represented the precious metals that were deposited in the bank. 

But the bimetallic standard soon phased out as several key events led to the abandonment of the gold standard. In 1913, the United States Federal Reserve was established, issuing promissory notes that acted like our present-day paper money. On demand, these notes could be redeemed in gold. In 1971, gold ceased to back the U.S. currency and the bimetallic standard was abandoned. Visit https://www.investopedia.com/terms/b/bimetallic.asp# to learn more about the bimetallic standard. 

Reasons Why You Should Invest in Gold

Even though the metal no longer backs any currency across the globe, it has in no way lost its value. In fact, it is still relevant and important to the economy as several central banks have been adding it to their reserves. The following are more reasons why you should consider investing in this precious metal:

Price Stability

Compared to other options and assets in the market, gold has had a history of being stable and steadily increasing in value. During a financial crisis, its value does not dip as much as other assets like stocks. As a matter of fact, during such a crisis, people invest in gold which eventually causes its value to rise. 

When it comes to the stability of assets this metal certainly takes the lead. Unlike stock prices that negative news can drive down, gold nearly always maintains its value in the market. 

Loans Can Be Gotten Easily Against It

Loans Can Be Gotten Easily Against It

Emergencies are a thing we humans must learn to accept and live with as life can have unexpected turns. We cannot tell when or how they will happen and the least we can do to mitigate their effect is to be financially prepared. 

In the case of an emergency, gold coins can easily be liquidated in the market to cover expenses. If you have invested physically in the asset, you can approach a bank or any other financial institution for a loan against it. Based on its value, you can get a loan within a day, which is not always the case with general loans. 

These loans are secured, and the interest rate will be much less than general loans. Once the loan is fully repaid, the bank returns your asset. Physical gold can be purchased from several sources. You can take a look at Goldcore for more on how to make a purchase. 

It Has a Universal Value

Precious metals do not lose their intrinsic value. Regardless of which part of the world you are in, this metal remains precious. A silver ring or a gold trinket would maintain the same value in Russia as it would in the U.S. all thanks to its universality. As a result, your investment is secure whether you remain in your location or move elsewhere. 

Keeps Your Wealth Private

If you prefer keeping your wealth and investment private, what better way to do it than to invest in bullions. With this asset, you can keep your wealth private since it can be safely locked away. Most other types of investment require the expertise of third-party financial consultants to manage. What is worse is that one could get scammed by fraudsters posing as financial experts. To a large extent, this can be avoided by investing in this precious metal as it keeps your private matter private. 

It Preserves Wealth

It Preserves Wealth

Gold is one sure way to preserve wealth for a long time and even pass it down to younger generations. It is a great way to keep your family’s wealth and ensure that your kids remain financially stable. To put this in context, let us consider this scenario. Imagine that you had the choice of keeping an ounce of gold or $35 bank in 1970 when an ounce sold for the same $35. 

If you had kept that ounce of gold, it would have maintained its value till this day, however, the same cannot be said for the $35. Because paper money is affected by inflation, that $35 would have lost nearly half its value in today’s economy. 

Final Thoughts

As with every other type of investment, some risks come with investing in physical gold. However, compared to others, the risks are much fewer. In fact, what you would most probably be worried about is keeping the asset safe. This is nothing the right insurance and a good quality safe will not take care of. 

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