An Investment Still Worth Its’ Weight in Gold


An Investment Still Worth Its’ Weight in Gold

by Amy Lignor


When it comes to gold, there are questions investors still want answered in 2018; investors who have not yet taken the “leap” and have chosen to stay with the “norm” when it comes to saving money. You may be surprised by what some investors think.

There are actually two slightly odd and completely old school reasons why people feel they should not invest in gold. Some believe that gold is simply a shiny relic that no longer holds the monitory qualities it once did; others believe paper currency is still the most reliable and gold’s only true usefulness comes when making jewelry. These arguments/beliefs could not be more outdated. It is a truth that gold is a necessary asset people should have in their investment portfolios.


It was in 560 B.C. that gold became the “normal” currency. Merchants wanted to create a standardized and easily transferable form of money that would simplify trade. Let’s face it, gold jewelry was already widely accepted all across the globe, so the creation of gold coins was simply a no-brainer. The importance of gold grew over time; even Great Britain developed its own metals-based currency in 1066. And in 1792, the U.S. government established a bimetallic standard. This “standard” simply stated that every monetary unit in the U.S. had to be backed by either gold or silver. In other words, the coins used as money to buy goods simply represented the gold (or silver) that was presently deposited at the bank.


It was because of the Gold Reserve Act of 1934, giving the U.S. government title to all the gold coins in circulation, that minting gold coins came to an end. This act established the idea that gold was no longer necessary to use as money. (The United States abandoned the gold standard in 1971 when the U.S. currency ceased to be backed by gold.)


But now, in this modern economy, it’s important to know that while gold is no longer being placed down on the counter at the local grocery store, it’s still necessary for the global economy to actually work.


Gold’s worth has continued to rise; paper currencies went the opposite way because of inflation. To better understand, in the early 1970s one ounce of gold equaled $35. Therefore, if you had the choice of holding an ounce of gold in your hand versus $35 in paper money, it would be no big deal which you chose because they were worth the same. Today, however, that same ounce of gold (upon the writing of this article) is worth $1,353.95. In the modern day economy one dollar is not even worth a full dollar when it comes to purchasing power. So if you had chosen to hold that ounce of gold in 1970, you would be wealthier today.


Gold is also the perfect way to get rid of anxiety. Whether you are talking about terrorism or tensions in the Middle East or Asia, etc., it’s obvious that political and economic uncertainty is (and will remain) a reality. For this reason, investors typically look at gold as a safe haven. Think about it: History is full of war, empires being brought to their knees, and political upsets. During these times, investors who held onto gold were able to successfully protect their wealth, which is something people still wish to do today.


Gold is also perfect for diversifying your portfolio. Regardless of whether you are worried about inflation or a declining U.S. dollar, the proof is there that gold has served as a solid investment, one that can add a diversifying component to your portfolio because it’s not correlated to stocks, bonds, or real estate.


When it comes to investing in gold stocks, you get a dividend-paying growth asset. Gold stocks generally rise and fall with the price of gold, but there are well-managed mining companies that remain profitable even when the price of gold is down. A relatively small increase in the price of gold can lead to significant gains in the best gold stocks, and owners of these stocks obtain a much higher return on their investment (ROI).


When speaking about the different ways of owning gold, there are many options to consider. Today investors can purchase gold in the form of: futures, coins, ETFs, mutual funds, bullion, companies, and even that reliable gold jewelry.


In the end, there are advantages to every investment you make. However, turning to that “shiny” metal will help you diversify, make money, and allow you to be far more relaxed when thinking about your finances as the world continues to offer bad news.





Visit Us
Follow Me

Social media & sharing icons powered by UltimatelySocial