What Makes Gold Such a Great Investment? 

Gold’s Rich History!

In order to fully understand the true value of gold and just how important it can be to add to your portfolio or just to own gold in general, it is key to understand the role gold has played in our global history. Throughout time, gold has been used as the currency of choice – or at the very least is closely coupled with the currency. The very earliest use of gold as currency was in the general time frame of 560-600BC in Lydia (which today is the region we know as Turkey).

Gold has existed as currency since 560 B.C. when the Lydians figured out how to separate the compound electrum into the gold and silver components, which ultimately led to the creation of the first true gold coin. Gold has been an unprecedented commodity of value from those early times in the 6th century B.C. clear through the present day in this 21st century. Gold has been a valuable commodity and has stood the test of time in being truly timeless.

Gold Mining

The importance of gold is probably best emphasized in knowing that most countries base their monetary system directly on the value of gold around the globe. This is referred to as the gold standard whereby, the currency is either literally made out of gold, or can be exchanged directly for a set amount of gold. In a matter of fact, the overall health of any economy can be determined from the current gold price. The gold standard was widely used in the 19th and 20th centuries – but most nations had abandoned it during the 20th century.

Why Not Invest in Gold – there’s Virtually No Downside!

Gold has held an inherent value throughout time and there’s little doubt that it will continue to do so. The macrotrends Historical 100 Year chart of Gold prices indicates an overall upward trend. While gold prices do fluctuate as do all other investments, it has a long-standing reputation for being the key standard in investments. There are only three things that have inherently held their value throughout time; Gold, Real-estate, and Gems. The only key concern is that an investor plan on and commits to keeping their gold holdings for a long enough time period to realize an expected profitable return. As of May 21, 2021 gold was $1,876.70 per ounce.

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How Does Gold Compare to Other Investments?

Gold has some distinguishing characteristics that make it an ideal investment compared to its counterparts. In a quick review, here are the areas that make gold a particularly attractive investment.

  •  Irreplaceable
  •  Limited Supply & Soaring Demand
  •  Satisfying to Physically Possess
  •  Moves in Oppositional Direction to other Investments
  •  A Key Diversification Strategy
  •  Hedges Against Inflation
  •  Increasingly Used in Electronics
  •  Portfolio Risk Management
  •  High Liquidity
  •  Holds Inherent Value
  •  Low Maintenance Investment
  •  Holds General Appeal
  •  Strong Positive Legacy

Irreplaceable Precious Metal

There’s are definitely good reasons why gold is scarce and the supply so limited. Finding gold in nature is a rare occurrence and the extraction method (once gold is located), is incredibly difficult. If a prospector is actually able to find gold, the process of mining requires extensive labor and quite a financial investment. It is not uncommon for a prospector to explore only to end up empty-handed or the outcome that very small quantities are found, that is if they are lucky enough to find any gold at all.

Gold Nuggets

The factors that complicate the gold mining process give rise to a slow cumbersome process and limit the supply of gold that exists and are likely to continue the ever-increasing scarce supply and high demand cycle well into the future. Techniques used to mine and extract gold has remained essentially unchanged throughout the years. New processes come to the marketplace to extract the gold strains embedded in the rock, but the majority of gold continues to be extracted using the traditional methods of slowly mining just as their predecessors did. This lack of advancement in extraction techniques causes the supply of gold to continue to come to the market ever so slowly as demand for gold far outpaces the supply.

There’s a finite quantity of gold contained in our Earth, and gold supplies have only been further reduced over time. Opportunities for new finds also continually decrease. Reports of lavish gold finds brought about an enormous outpouring of fortune seekers trying to find immense wealth by digging for gold. The big gold rushes of the 1800s significantly depleted the Earth’s gold stores.

Limited Supply & Demand

Gold has enjoyed high demand from its inception on the global stage- which has led to it becoming a leader and perhaps the best among the investment options available for acquiring and protecting wealth. But recent changes have made gold ownership even more viable as an investment. As gold does not experience the volatility and sometimes rapid price fluctuations seen in other marketplaces, it is a stable and standout investment from others. Also, an investor can be confident that their gold can easily be sold (as you can rely on there being willing buyers in abundance) regardless of how long the time period is prior to selling. These positive factors of owning gold have only compounded in recent years as gold supply continually diminishes as the demand soars.

The balancing act of available supply and a product’s demand are the two primary factors that ultimately determine a product’s price – and hence its market demand. As the gold supply naturally depletes and becomes more scarce as it is continually mined year after year, the laws of supply and demand will bring an upward trend in the price as a result. This trend is further reinforced by the fact that the desire for gold ownership is forever growing. The demand is always rising in a cyclical reinforcement – the better investment it is, the more people want to buy it, and the more they buy it – the rising demand makes it an even better investment.

Gold’s demand is additionally enhanced by the nature of how gold prices tend to move in a direction that is just opposite the direction of the prices of other investments. Investing in gold becomes even more attractive to the investor as owning gold insulates them from volatility in their overall portfolio. In an uncertain market, the fluctuations in the stock prices create a higher demand for gold when investors seek to minimize and offset their losses by securing a gold investment which moves oppositional to other investments in the market. As there is a downward turn in the stock market, the price of gold has an upward turn, which is highly desirable to investors in hedging their bets with possible stock market losses.

High demand

We are not only witnessing increasing gold demand from individual investors and financial institutions but there’s a trend in technology sectors where many products require gold in their construction at a rate that is ever-increasing. Various types of electronic devices have gold implanted inside them, and as demand for these electronics grows, the more scarce the supply of gold and demand increases. We likely all agree that the focus on electronics & technology will continue to grow with the expansion of electronic gadgetry. This will likely result in a continuingly growing demand.

The make-up of retirement portfolios is also recently changing – causing another new source of demand for gold. Historically, retirement portfolios and traditional IRAs have been composed of stocks and bonds. As gold can hedge stock & bond losses, investors are increasingly bucking the mainstream investment strategy and choosing to add gold to their retirement accounts.

Stockpiling or hoarding something of value is not generally viewed as positive when it involves the excessive compulsion to overfill your house, office, or garage with unnecessary items. However, stockpiling gold is entirely another matter. When a highly sought-after product is scarce (as gold clearly is), stockpiling results in less of the product being available. This inevitably creates even more scarcity of the product and ultimately results in a predictable rise in the price.

We all generally understand the basic concept of supply and demand, but the growing scarcity of gold combined with the continuing demand makes gold truly a unique scenario in the Global market. This phenomenon has caused gold to have a stable and predictable trend toward overall elevating prices.

Gold’s allure brings about a consistently high demand which essentially is guaranteed to continue and remain strong long into the future. In fact, Gold’s demand has continually increased in the last millennia. We investors can confidently count on this demand for gold to remain solid in the future for whenever you might want to sell.

As discussed, the future value of gold is virtually guaranteed – making it stand out as being among the most lucrative investment opportunities of the 21st century. Gold’s demand is only going to increase as uncertainty arises in international economies due to global turmoil. Gold ownership offers a safe haven for years to come. At this point and time, you will not likely discover any investment more attractive or lucrative than the choice to invest in gold.

Satisfying to Physically Possess

There’s enormous satisfaction in being able to touch and see your collection of personally owned coins and bars of gold rather than the somewhat sterile action of viewing your portfolio on a computer screen. The pure beauty of the coins & gold bars provides motivation to purchase additional gold for your investment collection. Collecting physical gold is not only satisfying but is an enjoyable venture, allowing you to add to your collection gradually and adding wealth to your bottom line with each purchase.

Moves in an Oppositional Direction

The demand for gold is also enhanced by the nature of how gold prices tend to move in the direction just opposite of the direction prices move with other investments. Investing in gold becomes even more attractive to the investor considering gold insulates them from volatility in their overall portfolio. In an uncertain market, the fluctuations in the stock prices create a greater demand for gold as investors seek to offset their losses in the market. As the stock market goes downward, the price of gold often goes up, and this effect is highly desirable to investors in hedging their bets with possible stock market losses.

Key Diversification Strategy

One of the wisest strategies of any investor is to diversify. A widely diversified investment portfolio is a collection of investments comprised of a variety of asset categories. This diversification can minimize the negative effects of a downward price fluctuation in one particular asset as it will counteract the upward price movement of another investment in your portfolio. Adding gold to a portfolio is a popular way to achieve diversification and has the key benefit of moving in the opposite direction of traditional investments. When other investment vehicles are down…. gold is up!

The best analogy to explain the importance of diversifying is thinking of it as electing to minimize the losses that can occur when you put all your eggs in one basket. To sufficiently diversify, you should attempt to purchase different types & categories of assets. The greater the diversity in your portfolio, the more likely there will be protection from the adverse situation from having an entire category of investments tumble downward. Having various portfolio assets will compensate for losses in one area with gains in another – the precise reason why choosing gold is a smart option for diversifying.

Hedges Against Inflation

Primarily, an astute investor will choose to purchase gold for the direct purpose of protecting their portfolio against inflation. If an individual is hopeful and wanting to become a successful investor over the decades, the diminishing currency values continue to be a global phenomenon that investors must be aware of. Should the value of the US dollar Fluctuate and spiral downward significantly in value over a period of a few decades, converting your dollars into gold will help. Remember, when other markets go down, gold compensates the portfolio by going up!

Great investment

By adding gold to your investment portfolio, you will watch the overall value of your investment increase over time. We all invest with the goal of seeing increasing gains in the value of our portfolio over time. Instead of facing a possible disappointment with a decreasing portfolio value with holdings all solely in cash, owning gold will result in lucrative gains instead of watching your portfolio become deflated. Gold prices have been known to triple in value over a time period of only decades. Choose wisely and buy gold with money you have worked so hard to earn.

Ever-Increasing Electronic Uses

We’re seeing greater demand for gold from both individual investors, financial institutions and an increase of use in various technology sectors. A large percentage of electronics are made with gold implanted inside the products they make. As new electronic gadgetry is developed and societies demand for them grows, in turn it will bring about an increasing demand for gold. With continuing technology, we can expect to see an ever-increasing demand for gold to accommodate the increasing electronic gadgetry.

Virtually everything electronic now contains components made with gold. There’s no reason to expect that the current trend will do anything but grow, so we should expect to see more and more demand for gold as products are developed requiring gold in their construction. Whatever the specific mission of an electronic gadget might be, we can easily assume that the need for gold to produce these devices is only likely to accelerate over time – again increasing demand.

Risk Management

Investors who are exclusively in stocks & bonds are continually exposed to the whims of the wider landscape of the global economy, which can introduce all sorts of issues resulting in unexpected price fluctuations that are essentially impossible to predict. Gold offers a safe haven from this roller-coaster ride of up and down prices, providing consistent and reliable returns you can expect year after year. In buying gold, the key concern is committing to holding onto it, long enough to experience a handsome gain. In the World of gold, the longer the investor holds onto it, the more likely an impressive return will be generated on that investment.

Gold provides one of the best means to protect your portfolio against the uncertain events of the future. The global crisis is known to drive gold prices upward as political and economic turbulence causes investors to flee toward more reliable investment options.

To further reduce your risks, you might consider using the practice of Dollar-Cost Averaging which further manages your risk. In this scenario, you devise a predetermined strategy to buy equal portions (a fixed amount spent each time) at regular intervals (usually monthly) without any regard for whether the price is on an upward or downward trend. Dollar-cost averaging can serve to mitigate the impact of volatility on the overall purchase and allows the investor to accumulate more and more gold over time.

Highly liquid

Gold prices are relatively stable as compared to other kinds of investments. Gold also is very liquid, so deciding when to sell should not present any anxiety as exchanging it for cash will be essentially instant. This quick and easy exchange makes gold vastly different than owning another less flexible investment such as real estate. The instant liquidity of gold will allow you to access what you have saved at a moment’s notice at any point you chose to.

There are now companies that focus specifically on buying and selling gold products. The investor can now easily purchase gold products without any of the possible risks involved in buying gold on your own. Quite often, the purchase of gold products in an open marketplace can expose the investor to various scams & risks regarding the purity of the gold purchased.

High Liquidity value

Purchasing jewelry and coins from second-hand dealers is quite unreliable. Unless you purchase your gold from a reliable & reputable company you can’t be assured that the jewelry and coins are pure gold. Companies that specialize in selling this gold will allow you to purchase the purest of gold at going market rates. You’ll have the added benefit of having a resource to buy your gold back if and when you’re ready to sell. These professional services become a safe one-stop shop for buyers who are interested in purchasing or selling gold.

Among these reputable companies – there are some that deal in coins & bullion that are exclusively government-issued. The Government issued products are 100% guaranteed to be perfectly minted assuring the investor that the purchase they are making is among the purest that exists. Obviously, the purer the gold, the easier it will be when it comes to selling it on the market as compared to products from the gold of lower quality. This gives you the reassurance that you invested in gold among the finest that is available to buy.

Inherent Value

Many commodities that an investor might add to his or her portfolio involve whims or trends that might be occurring within society. The most recent example of this is seen in the bitcoin explosion which is highly volatile and we see the prices soar and dive like a roller coaster. What may be prevalent over a few years – or even a decade or two may not weather the test of time. Gold’s reputation and ability to endure any and all catastrophes in the market give it ultimate credibility in its capacity to always have inherent value.

Low Maintenance

Investing in gold offers the investor a low maintenance option as opposed to an investment in real estate which is associated with a high level of maintenance. The expectation in buying real estate is that you undoubtedly will spend extensive time addressing maintenance issues – either by “doing it yourself” or hiring it done. In general, most investors would elect to avoid the hassle, time involved, and cost. Gold ownership is a low-maintenance endeavor..

Holds General Appeal

The reasons to invest in gold are as varied as the people who might choose to buy it. In the simplest terms, gold is a commodity of very limited supply and enjoys high demand in our society. Whether you are looking to buy gold jewelry purely for your personal enjoyment or are making a serious decision out of a motive to boost your investment portfolio -the primary reason remains- there is a limited supply and an overwhelming demand. The prices will only continue to climb over time. Investing in gold is a strategy that is very wise regardless of your end goal.

Owning What Everyone Wants

The reasons to own gold are as diverse as the people who own it. The primary reason you should choose to invest in gold is specifically because of the high demand that exists for this precious metal. As the supply continues to become more scarce, the option to own it diminishes as the supply decreases and the price of gold soars. We all understand the basic human desire to be part of a trend and own what everyone else wants to own.

Gold Jewelry

Another consideration for increasing gold demand is the growth of the global population. As developing nations advance and their World standing rises along with their overall wealth, we often see an increased desire for finer things – such as jewelry made with gold. This desire to own finer things will serve to further squeeze the already limited supply of gold and increase the level of demand for gold that hasn’t previously been before in history.

Gold’s Positive Legacy

Gold has existed as a valuable commodity for time immortal and its allure and value have only grown over time. Unlike all other investments, gold is truly a human civilization legacy – not merely a wise portfolio investment. By investing in gold, you are seeking a brilliant investment that happens to have great sentimental and emotional viability. Gold becomes increasingly difficult to extract, uses for gold are ever-increasing, and supply is ever diminishing making it a one-of-a-kind treasure.

There’s Never Been A Better Time to own Gold!

Gold has historically held an inherent value and has continued to be in demand for a millennium. Throughout time, it has been highly desired and revered as a valuable asset, but the overwhelming demand for gold ownership has reached a fever pitch in terms of its desirability. On top of gold being the overall great investment that it has always been, today’s market offers new and optimistic outlooks as this luxurious commodity continues to become more and more scarce and demand skyrockets. Today’s gold investor is literally sitting on a gold mine.

Added to the traditional motivators to own gold, the current day offers a new horizon for investors hoping to capitalize on owning gold. In today’s market, we are seeing an even greater surge in the demand for gold in investment portfolios, the industry is increasing gold used in the production of electronic products, retirement IRA’s are diversifying and are no longer just containing stocks and bonds but are trending toward adding gold as a supplement.

Let’s Sum It All Up!

Many commodities that an investor might add to his or her portfolio involve whims or trends that might be occurring within society. The most recent example of this is seen in the bitcoin explosion which is highly volatile and we see the prices soar and dive like a roller coaster. What may be prevalent over a few years – or even a decade or two may not weather the test of time. Gold’s reputation and ability to endure any and all catastrophes in the market give it ultimate credibility in its capacity to always have inherent value.