Why Invest In Gold

Gold is a soft, dense, shiny metal and the most malleable metal known. Pure gold has a bright yellow color. It has been the most highly sought-after precious metal for coinage, jewelry, and other arts since long before the beginning of recorded history. As you can imagine this makes it very valuable. Gold has been the most common basis for monetary policies throughout human history. Gold has also been frequently linked to a wide variety of symbolisms and ideologies throughout history. As of 2009, it is estimated that somewhere around 5.3 billion troy ounces of gold have been mined. One troy ounce is equivalent to 31.104 grams.

Historically, gold has been a proven method of preserving value when a national currency was losing value. If your investments are valued in a depreciating currency, allocating a portion to gold assets is similar to a financial insurance policy. In the past year, the climb in the price of gold is due to many factors, one being that the dollar and other monetary units are losing value.

If you were consulting a broker, it is unlikely they would recommend investing in gold. Besides the last few years, gold had pretty well peaked off. In previous years gold stocks had not done very well either. Gold also does not provide income or direct interest. However, there are plenty of reasons why you might consider investing in gold.

Have you heard of the economic struggles? Of course you have. I bet you have also seen recently where gold prices are soaring. The dollar is weak and getting weaker due to national economic policies which don’t appear to have a happy ending anywhere in sight. U.S. government economic policies over the past decade have systematically projected the U.S. economy down a road with uncontrollable federal spending and an uncontrollably increasing trade deficit. With the recent devaluation of many international currencies, the U.S. dollar was the international safe haven of last resort. We are seeing signs of this ending due to many financial factors. This has cause the dollar to lose in international value and will increase the price of alternative investments, such as gold.
The last several years are the beginning of a major bull move similar to the 70’s when gold moved from $38 to over $800. That market is in full swing right now. Central banks in several countries have stated their intent to increase their gold holdings instead of selling, which helps increase the demand for gold, and in return the value. Gold price appreciation makes up for lost interest, especially in a bull market such as we are seeing now.

Kitco.com has some nice graphs that show the price of gold in USD per troy ounce.If you look at any pattern from the 10 year history shown, you can see a steady increase in gold value.

Please look for articles in the near future that will go more in depth about gold investment opportunities.

Updated: May 5, 2011 — 5:53 pm

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.