gold

Top 2 Reasons Why You Should Invest in Gold

Because gold has a recognized value worldwide, it had been used as a universal currency dating back to the Byzantine Empire.

However, upon the signing of the Bretton Woods Agreement back in 1944, the US dollar has replaced the gold in being a universal currency. But that didn’t stop gold from being a valued asset. It may have ceased to be a currency but not a store of wealth. However, many developing countries still used it as a backer to their devaluing currencies. Many years have passed, and gold still remains a priceless treasure.

When Richard Nixon removed the gold standard in 1971, other countries followed suit. It may have been erased from the memories of many people, but even when it was no longer a currency, it retained its value by being an excellent investment form.

With the rise of new investment instruments, some people would ask if in today’s modern era, is gold still considered a valuable investment? There are lots of reasons why gold makes for a significant investment. Two reasons are:

1. An Excellent Getaway from The Paper Currency Experiment

The fiat currency which we have all believed to be the ultimate form of money is only an IOU. Meaning to say that it is a representation of a particular credit that countries are issuing. The paper money phenomenon first started out as an experiment. Eventually, when society became more accepting of paper money as the standard of financial systems, many government units have lost control of the economy. And, thus, they resorted to printing massive amounts of money. This, in turn, resulted in hyperinflation.

Hyperinflation has happened time and again in the past. For some people, it may be best to leave the past behind. However, you can’t ignore the saying “history repeats itself.” With that in mind, one factor that makes gold an excellent investment is that it can serve as a replacement for fiat currency.

People may refuse to accept paper money as payment if your currency has been devalued. However, they will always take gold because it is the single asset that has value all over the world.

2. The Relationship of the US Dollar and Gold

There is no denying that the US dollar is the leading currency worldwide. However, just like other fiat currencies, the US dollar also tends to fluctuate through ups and downs.

There is an intriguing association between the US dollar and gold. When the dollar is at a high value, gold appears to be heading towards that direction. However, when gold is purchased at favorable prices, the dollar also goes up in value. Meanwhile, when the dollar has low value, the price of gold tends to go up.

The US dollar is currently at an all-time high. But instead of waiting for a currency fluctuation, you’d rather start investing in gold. That way, when the dollar swoops in value, you will have an excellent exchange for gold.

To Buy or Not to Buy

The main goal of investments is to increase and protect one’s wealth. The topics discussed above cover the primary reasons why gold is people’s go-to when it comes to financial problems.

 

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