For 2,000 years (and some researchers claim more than 5,000 years), gold has been the main store of value (and a sign of wealth). At the same time, many people consider gold to be just a piece of jewelry – and therefore they gladly wear it on their fingers, neck, ears and other parts of the body.
Despite the fact that the United States of America abandoned the gold standard in the middle of the last century (that is, from providing gold for their paper dollars), and the former head of the Federal Reserve Ben Bernanke said that “Gold is a barbaric relic of the past”, gold continues to be one of the safest ways to invest money. To be convinced of this, it is enough to look at what different states keep their gold and foreign exchange reserves (including America itself with its famous gold storage facilities in Fort Knox and in the Federal Reserve Bank of New York). The name of these reserves speaks for itself: they keep their reserves in gold and hard currency! And usually, there are quite a lot of gold reserves.
Pros of investing in gold
1. It is a defensive asset that gives you confidence because “gold is always in value.”
2. This is a safe haven during all sorts of shocks and financial crises (which have recently become a frequent occurrence in the modern world amid the coronavirus pandemic).
3. Gold can always be sold, even in a crisis.
4. The price of gold usually moves in the opposite direction compared to the exchange rate of the national currency. For example, when a currency depreciates, the gold rate strengthens (it rises in price).
What conclusions can be drawn from this?
1. Well the obvious thing is to become a state yourself and boldly accumulate your own gold and foreign exchange reserves.
2. Acquisition of gold is a speculative investment of money because it does not add value (unlike business or rental real estate).
3. It is recommended to keep gold in the amount of 5-10% of your investment portfolio because gold is a highly risky instrument (commodity). For instance over the past year, the market value has hardly changed, but during this time it managed to fall by 30% and rise again.
How it is possible to buy gold?
There are different ways to buy precious metals as a tool for investing money:
1. You can buy an ingot of gold. To store gold bars, of course, is better in a safe or in a safe deposit box.
2. You can open an impersonal metal account in the bank. This will allow you to buy gold not in its usual natural form, but in the form of a bank deposit (that is, in fact, in the form of a simple entry on your bank account). This will relieve yourself of the headaches to ensure the safety of the purchased gold.
3. You can become a numismatist and buy an old gold coin that has a collectable value (which will add a peculiar flavour to your investment). Also, banks are actively selling various commemorative and investment coins.
At the same time now you can buy not only gold but also other precious metals – silver, platinum or palladium.
No matter what happens in the world, what type of crisis various countries face – gold never loses its value and it is always a desirable investment. Gold is a unique resource and it is always a great idea to purchase one. Economic shocks are always powerless against the might of gold.