The world of the investor can be a tricky one and one which provides challenges in which they are looking to grow their wealth in a secure and consistent manner. Investing in Gold has historically proven to be a safe haven for investors providing both security and an established investment from which good returns are easily achievable over the longer term. It is difficult to find a match in the combined investment attributes of investing in gold.
Gold rewards investors at the most convenient of times, due to the sustainable spot price and the liquidity of the asset. This is particularly prevalent in times of financial hardship and economic downturns.
Gold is the complete opposite of debt as it is a physical asset and can be liquidated very effectively and at very low cost.
Gold has unique qualities which ensure that it does not corrode, tarnish or oxidise in natural environments. Unlike may commodities Gold is not under threat from industrial usage as it has very few commercial benfits in the industrial world and is only used in very specialist areas. This has been a major factor in the growth in gold price, especially over the past 200 years or so. As a result the complete gold reserves that have been processed over the last 4,000 years remain stored in vaults around the world. Gold is displayed globally either as jewellery, bullion or coins.
The global gold reserves are now in excess of 160,000 tonnes. On the surface this would appear to be quite a large amount of gold. However due the physical attributes of gold being extremely dense, if the complete global reserves were assembled in one place the total area would only measure somewhere in the region of 19683 cubic metres .
Just over 2500 tonnes of gold come onto the market each year.
Measured against the gold that is already in existence above the ground this represents an annual increase of 1.625% . Relatively speaking this is a very small increase (inflationary) when compared to other market measurables. This increase is solely driven by market demand which has a direct impact on the daily price of gold. Probably the most endearing thing about investing in gold is that the gold market and the price of gold remains largely unaffected by the direct influence of politicians and investment banks.
Comparing this to the Euro and the Eurozone, which currently is the most hawkishly managed major world currency, is currently expanding at a ludicrous rate of 11.5% per year.
Combined debt defaults and inflation are now complimenting each other, culminating in a new an more severe crisis regarding the value of money. Gold has already risen 300% when measured against the New York stock market since 2003.
Gold is an asset that doesn’t care what the economic climate is. It can be an inflationary or deflationary economy. In fact gold has unique characteristics as an investment asset due to its restricted supply and indestructibility. There are times of strong economic growth where in fact gold can lose value. It is assured that if gold is invested in as a medium to long term investment then it can be seen to a very sustainable and secure investment. (See Historical Gold Price Chart)
Investing in Gold will continue to grow if the world’s major currencies continue to plunge into the inflationary spiral that we are currently seeing around the world.
As an investment, gold does not really care what flavour the economic climate is, whether it be inflationary or deflationary. Gold has unique characteristics and attributes as an investment asset due to its restricted supply and its physical nature of virtual indestructibility. In times of strong economic growth gold can lose value which can be seen throughout the various phases of global economics. However if gold is invested in as a medium to long term investment then it can be seen to be a very sustainable and secure investment. (See Historical Gold Price Chart)
Buying Gold as an investment is could be considered a shrewd move given that the world’s major currencies continue to self administer the inflationary spirals that we are currently seeing on a global scale.
Major changes in global monetary policies affecting the over supply of the Dollar, Euro and Yen will be necessary to stop gold prices from increasing significantly.
After consideration of all of the evidence discussed previously in this article and still having a firm belief that the world’s central bankers will in the near future are going to set interest rates far in excess of the real rate of inflation, it would probably be a good idea to avoid investing in gold.
To read more about investing in gold see investing in gold