It is a good idea to own gold because of its rich history and value throughout the ages. Gold is respected throughout the world and has been a valued currency through many civilizations and for thousands of years. And, people have continued to rely on gold for many reasons. Here we will review five reasons why it’s a good idea to own gold in the modern world.
1) Maintains Value
Gold has always been able to maintain its value unlike other currencies, assets, or coins. It is relied on by many people to help preserve their wealth and is an effective method of being able to transfer wealth to the next generation.
2) Hedge against Inflation
Gold has always been an important tool for fighting inflation. That’s because the price of gold rises typically at the same pace as increases in the cost of living. It has always fared much better than other types of investments during the most inflationary times of the last 100 years.
3) Protection against Deflation
In difficult economic times when business slows down, prices fall, and the economy has excessive debt what results is a period of deflation. This is what occurred in the 1930s during the Great Depression. At that time practically everything including real estate and other commodities were dropping prices rather quickly, but gold prices soared and provided outstanding purchasing power.
4) Political Uncertainty
When there is political uncertainty gold still manages to retain its value. Whenever there are world tensions or a crisis of a political nature people choose to invest in gold because of its safety. That’s why we find that this “crisis commodity” rises quickly in price when confidence in the world governments is waning.
5) Increased Demand
With the increase in wealth from emerging markets the demand for gold has quickly increased. India is one of the fastest-growing economies in the world, and they also happen to be the nation that consumes the most gold. Typically, October is the month of the year where the highest demand for gold is found globally and it matches the wedding season for India. Another emerging market that has consumed plenty of gold is China where they use gold bars as a method of saving.
Gold should actually be of a component of everyone’s investment plan because it responds to events that cause other investments to decline such as stocks, currencies, and bonds. And, although gold prices can be very volatile when held for a short period of time, when it is held for the long run it has maintained its value.
This article was written by Jame who loves to write about forex, stock trading and personal finance. He runs a website called online stock trading site that has a great user focused Optionshouse Review.