Gold is respected worldwide for its value, transferability, investment and as a store of wealth. It has a rich history, and for thousands of years this has been recognised by cultures all over the globe as a means of both storing and transferring wealth. So why is gold the perfect investment in 2023?
The first pure gold coins were struck during the reign of King Croesus of Lydia, shortly after appearing around 650 B.C. People have held gold for numerous reasons over the centuries. Economies and Societies have placed a significant amount of value on gold. It is the precious metal that acts as a hedge against inflation and the cost of living crisis ! Why? Because gold is a finite commodity and governments cannot dilute its value by simply printing more therefore as demand increases for Gold, and supply remains stagnant, the price can only go in one direction, UP!!
Within this blog, we look at the reasons to consider owning some gold in 2023.
LOOK TO THE HISTORY BOOKS
Unlike paper (fiat) currency, gold has a long history of holding its value. Gold is a commodity that allows you to pass on and preserve your wealth from one generation to the next. Gold doesn’t corrode and can be melted over a common flame; this made it easy for our ancestors to work with and stamp as coins. Gold also has a unique and beautiful colour, unlike most other elements, and the atoms in gold are much heavier. It took Einstein’s theory of relativity to figure out the electrons in gold move faster, creating absorption of some light. Its therefore understandable that people have valued the unique properties of gold since ancient times.
WEAKNESS OF THE £££
Although the British pound is one of the world’s most important currencies, when inflation takes hold – as it is doing now – people can rely on the security that gold offers. Gold and Gold Jewellery always fair best in difficult economic times. For this reason, gold is the perfect investment.
TO FIGHT INFLATION
Historically, gold has been the best hedge against inflation as its price tends to rise when the cost of living increases. Investors are currently seeing gold prices soar and the stock market plunge due to inflationary pressures on the economy. When an economy loses its purchasing power to inflation, gold tends to be priced in the currency units and thus tends to rise along with everything else. People are encouraged to buy gold when they see that their local currency is losing value, so gold is seen as a great store of value.
Gold retains its value not only in times of financial uncertainty but also in times of geopolitical uncertainty. Gold is known as a ‘crisis commodity’ because people flee to its relative safety when world tensions rise. The Russian and Ukrainian war is a good example of a geopolitical circumstance which could influence the price of gold in a positive way. Gold often surpasses other investments during such times and its price can rise significantly when confidence in governments is low.
GOLD IS IN HIGH DEMAND
In previous years, increased wealth of economies boosted demand for gold. In many countries, gold is an integral part of the culture. For example, in China gold bars are a traditional form of saving and India is the second-largest gold-consuming nation in the world, predominantly for jewellery. As such, the Indian wedding season in October is traditionally the time of the year that fuels the highest global demand for gold. Demand for gold also has grown among investors. Even the SPDR Gold Trust (GLD) has now become one of the largest and most frequently exchange-traded funds (ETFs) in the United States.
WHAT DETERMINES THE PRICE OF GOLD?
Gold prices can vary in the short term, but history has shown that gold maintains its value in the long term. In general, movements in the price of gold depend on supply, demand, and investor behaviour. Because the metal is often used to hedge against inflation, the pace of inflation impacts gold prices. In addition, the current deteriorating economic conditions are boosting gold prices because it has always been seen as a safe investment in difficult times.
WHY SHOULD YOU INVEST IN GOLD?
It’s as simple as this; Gold has a history of maintaining its value, making gold a useful asset against inflation. Gold prices tend to increase when other currencies underperform and during times of political and economic uncertainty.