Gold is arguably one of the most precious metals. For a long time it was generally, the main form of currency for. Way before World War 1, all coins, and notes in circulation were a form of ‘guarantee’ for the gold reserved in banks; every note and coin had to have a certain amount of gold as a backup.
However, in 1934, the use of gold as a currency came to a stop and notes and coins was set to be legal tender without having the trouble of gold investment in the Federal Reserve Bank. This would send mixed signals about the importance of investing in gold. More experienced investors claim that gold is a solid investment that one can sell and buy today.
However, there are limitations to the amount of gold that a particular investor can buy and sell. It is a good and wise idea for one to invest in a few gold bullion. Gold acts as a buffer against bad trends such as inflation, low interest rates, economic instability, and political unease/tension.
Most currencies if not all are usually affected by inflation. Generally, inflation is the upsurge in the price of goods and services. It also means the loss of value in the particular currency. The effect of having too much money chasing few goods leads to overpricing of goods and services.
The good point about gold as investment is that the value cannot face devaluation by recession or even inflation of financial downturns. Many investors often turn to gold investment when their currency is close to worthless. The reason for such high standards is that gold is available in shares and it is a hard asset to buy.
It is a proven fact that the value of gold actually appreciates with inflation hence making it a more popular investment in the event of an economic crisis.
Economic Instability and Political tension
Economic instability goes hand in hand with political tension. It is hard to tell of a country that has had its currency value remain firm after political unrest. If you can go back to world war 1and 2 it is easy to read of history of economic depression that came with the time.
The fluctuation in prices is easy to blame on the market fluctuations. Many investors usually invest their money in form of gold when they foretell of political instability for the price of the metal cannot depreciate. In fact, statistics indicate that its value appreciates with time.
Low Interest rates
When it comes to equities, bond or real estate investment and the investor fears that there is risk of inflation then they massively invest in gold. This reason alone shows the trust that investors have in this metal. During the 1970’s stagflation period there was a massive investment on this metal.
Gold is for sure a great secure way of investing in times of recession and economic instability. It is an ultimate safety net for wise investors the reason that makes it the number one sought after metal.