Gold has been used as a store of value and medium of exchange for at least 7,000 years.
It began in the Mediterranean and Eurasian worlds thousands of years ago as a currency.
However, it wasn’t until long after many other commodities were used as currency that Gold started to gain popularity.
The yellow metal has always been in demand, with an intrinsic worth independent from economic cycles and geopolitical influences.
In times of geopolitical instability and economic uncertainty, the price of gold tends to rise as its appeal as an alternative haven asset increases.
Gold is rare, durable, and easy to divide into smaller units without damaging its integrity, unlike most other commodities.
Benefits of Investing in Gold
Gold is a valuable commodity with a long track record of being a good investment.
There are many options for investing in gold, and the open market is the best place to buy gold coins, bars or exchange-traded funds (ETFs) that offer fractional ownership.
Gold can be an alternative to bonds, stocks, and cash when interest rates rise.
However, the value of gold can also be affected by political instability, inflation, and supply shortages.
However, with its history as a valuable asset and the fact it may still increase in value—despite recent fluctuations—gold is worth considering for diversification purposes in any portfolio.
Recent market volatility caused by the Covid-19 pandemic has investors wondering whether gold will be a good investment in 2022.
However, if you believe that there are still risks to the economy, low-interest rates may continue to drive people into the yellow metal.
The last two decades have seen interest rates drop and financial uncertainty rise, which caused gold prices to climb.
If financial uncertainty continues, most likely propelled by the weakening in economic growth following the pandemic, we could see gold hit new highs in 2022.
When it comes to protecting wealth and preserving value, investing in gold is one of the most common ways for people to do this.
One reason is that gold holds its value over time – unlike currencies, which can become devalued through inflation and other economic changes.
When you sell something made with gold, the price will likely be higher than what you paid for it, even if there has been a bumpy market over the years.
Gold isn’t just an asset, it has practical applications and can be used in dentistry, medicine, and electronics, and it can be more easily shaped than some other elements.
Used in hedging
Many investors seek to purchase gold because it often holds its value or appreciates alongside inflation rates. In addition, many investors seek out this type of investment as a ‘hedge’.
For example, if an investor is losing money from the exchange rate and then realizes they are losing money due to inflation, they may look to buy gold to protect their wealth against further losses.
This logic explains why investors often purchase gold in these circumstances and should be considered if you want to invest in gold.
Gold stocks are often an excellent investment for investors seeking to diversify their portfolios.
In addition, gold stocks can represent a much more comprehensive range of assets than gold futures contracts or coins since one share of a gold stock typically represents ownership in the entire company.
Additionally, even when the price of gold is low, many gold mining companies pay substantial dividends, which help provide further incentive for investors to buy stock in these companies rather than invest in gold bullion.