You'll have heard it said that there's no such thing as a safe investment, but you'll also have heard it said that something is worth its weight in gold.
That's because everybody knows that gold is a solid, reliable, dependable, valuable material. While other forms of investment and commodity come and go, gold stands firm. People have been using gold as both an investment and a form of currency for thousands of years, and there's no sign of that trend changing any time soon.
That's why we believe that it still deserves consideration as the best possible choice as an investment, and we hope to convince you of that view with this article.
Our opening statement is true - there is no such thing as a safe investment. When you commit money to any kind of investment, you do so in the knowledge that the value of your holding could go up, down, or be lost entirely.
Traders like to pretend that the investment market is more sophisticated than the average online slots game, but it isn't really.
A well-qualified, experienced trader or adviser might be able to influence the outcome of investment more than someone on an online slots website can influence what happens with their next spin, but there's still a considerable element of chance involved. The metaphor still holds true, though.
There are always winners as well as losers with paypal slots , and there are always winners with investments, too. We think gold gives you a better chance of being a winner than any other investment type, and here are our reasons why.
Gold Bucks The Trend
While it's not entirely accurate to say that gold never depreciates at all, it's fair to say that it depreciates far less than almost any other asset during a time of crisis.
Currencies may no longer be backed by gold, but that's worked out to gold's advantage. In this chaotic year, we've seen the value of almost every global currency take a huge hit even if they're recovering now.
Gold bucked the trend and did the opposite. By September 2020, gold was trading at $2,000, having started the year closer to $1,500.
Gold sometimes even thrives during poor economic conditions because people turn to it and pump money into it as a stable, non-depreciating investment. It's one of the very few ways that you can make money while everyone else is losing theirs.
Demand For Gold Is Increasing
Where there's strong demand, there are high prices. That's good news for gold because gold demand has gone up significantly in China and India - two of the world's biggest markets.
Although the current global situation has dampened demand slightly, gold was selling for record high prices in China in May this year.
The trend is being driven by the popularity of gold jewelry in both countries. The giving of golden gifts is a cultural tradition in both countries, and both countries have rapidly expanding populations.
More people means more gifts to buy, and more gifts means more gold. In further good news, the ranks of the middle class in both countries are swelling. They’re the people most likely to make these gold jewelry purchases.
There’s Less Gold Around That There Used To Be
Scarcity and rarity play a role in the factor of the value of any physical asset. That means gold is likely to become even more valuable in the future because there simply isn't much of it left in the ground.
Almost every major gold mine in the world has been exploited to almost its full potential, and finding new gold mines is becoming ever more difficult and expensive.
Within the industry, it's thought that all the 'easy to get' gold has already been obtained, and trying to access the rest of it might incur more cost than it makes in profit. If there's less new gold arriving on the market, the value of all the gold that already exists gets a boost.
Gold Survives Political Turmoil
It's always election season somewhere. There's a major election about to happen in the United States of America, but next year it will be somewhere else.
The cycle never stops, and political instability creates turmoil in the market. Many of us found that out first hand when Britain voted to leave the European Union, and stock markets across the world took a hit because of the shock.
A lack of confidence in a government can lead to a lack of confidence in the market, and when there's no confidence, people go looking for a 'safe haven' for their money. That safe haven is usually gold. History tells us that the price of gold appreciates the most during times of political struggle and turmoil, and few could argue that the global political situation isn't a little grim at the moment.
Central Banks Are Boosting Their Gold Reserves
When in doubt, look to the central banks for guidance. They build their portfolios and holdings to protect against recessions, disasters, and just about anything else that can affect the market and the things they buy tell us a lot about what their financial advisers believe the best and safest route to be.
Recently they've been buying enormous quantities of gold. During 2017, which is the last year we have credible figures for, central banks bought just under 320 tons of gold.
They clearly believe that they're storing value by buying gold, and we have no reason to doubt them. When the world's central banks are going all-in on gold, it's a sign that private investors ought to consider following their example.
All of our usual disclaimers apply here - this article is not financial advice, and we’re not advocating going out and buying gold without speaking to your usual financial adviser.
It’s important that you take advice from a suitable professional before you make any major decisions with regard to your finances and your investment. If you’ve got money to spend and you’re considering where to put it, though, we think it’s worth discussing the possibility of gold investments the next time you’re able to speak to your adviser.
They’ll hopefully be able to provide you with the best advice for your specific circumstances.