Why Invest In Gold?

Gold has held a revered status as universal "money" since ancient Egypt. Its enduring value lies in its ability to hedge against inflation and preserve purchasing power. Notably, gold serves as a financial asset for insurance, risk reduction, and hedging strategies. During times of crisis, central banks and investors instinctively turn to gold for stability. In today's era marked by financial repression and market volatility, physical gold is reemerging as the ultimate form of money. Holding real gold in the form of coins or bars stands as a prudent choice for asset preservation.

20 Year Price of Gold 

Gold as a Store of Value

Gold has maintained its purchasing power through time, a phenomenon that has come to be known as "The Golden Constant." A modern ounce of gold may purchase a comparable quantity of things as it did in the past. Gold is the best long-term inflation hedge and the ultimate store of value.

On the other hand, paper and fiat currencies, gradually lose value until they are useless. When compared to paper or fiat currencies, gold is the most valuable kind of money. The gold price is closely watched by financial markets and central banks as an indicator of future inflation, commonly known as inflation expectations, because it responds to changes in the overall price level and enables real gold to retain its worth. For this reason, the price of gold is frequently used as a proxy for inflation.

Gold as a Safe Haven

As a recognized and tested safe-haven asset, gold may act as a safety net during times of inflation and currency crises as consumers shift some of their wealth into gold. The price of gold almost always rises during financial market or economic downturns. This move into gold is based on past performance, which shows that most other assets' counterparty and default risks rise during times of market turbulence, while gold maintains its widespread reputation of stability. As a result, gold takes on the function of financial insurance against systemic financial system risks, geopolitical threats, and monetary crises.

Small denomination physical gold bars and coins are frequently sought after during extreme economic events like hyperinflation and currency crises because they have a high value-to-weight ratio, are portable, and maintain their value during times when fiat currencies lose all of their value. Furthermore, gold's liquidity is particularly important during financial crises because other financial assets are more vulnerable to counterparty and default risks.

In addition, physical gold can serve as a hedge against the natural depreciation of fiat money. Fiat currencies frequently devalue due to inflation and expansionary monetary policies, but physical gold has a limited supply and cannot be depreciated. The sustained long-term incremental depreciation of the US dollar in terms of gold from April 1968, when the US dollar price of gold was only $35 per ounce, to the present can be used to illustrate the currency hedging properties of gold.