We all know that gold is one of the most respected resources with high value from the very beginning of its rich history. The usage of gold started in various places in the world at the same time thousands of years before.
The first golden coins entered the market back around the first century Before Christ. Throughout the centuries, people have used gold for numerous reasons.
Since the technology advanced, the era of information brought us to a point where you can find online markets that will provide you gold coins for sale so that you can make a quality investment.
- It Retains Its Value
When compared with coins, paper currency and other assets in which you can invest, have in mind that gold has maintained the value throughout the ages. You can use it to preserve your wealth and to pass it on to the next generation as well.
When compared with the U.S. dollar, for instance, we have to say that it is a currency that affects the price of gold. Therefore, during the years between 1998 and 2008, the dollar fell significantly, and that leads to an increase in gold prices and the security of gold.
Have in mind that the price of gold increase three times between this particular period, and it reached a thousand dollars for ounce during early 2008. Between 2008 and 2012, it reached $1900 milestone due to the decline of the U.S. dollar.
- Inflation and Deflation
Historically speaking, you should remember that gold has always been a perfect hedge and security against inflation and other issues that could happen.
Therefore, as prices go up and down due to increased costs of living, in the last fifty years gold only increased and remained stable during the high-inflation periods.
On the other hand, deflation is a period in which prices tend to decrease due to the excessive debt of the economy and a low number of business activities. However, globally this particular situation was in rising during the Great Depression.
Since the purchasing power of gold reduced, the prices remained the same while other ones dropped significantly. We recommend you to click here, so that you can learn more on gold and its historical significance.
- Geopolitical Factors
Since the gold will retain its value during the times of financial and economic uncertainties, however, it will also happen due to geopolitical factors. We are talking about crisis commodity since most people tend to flee to safety when some tension happens.
Therefore, gold investments are outperforming when compared with other commodities and currencies. For instance, you should have in mind that gold prices experienced significant movements in the last few years due to the EU crisis.
The prices tend to rise when the confidence in governments is at the lowest bars.
- Problems With Supply
The main problem with gold is its limited supplies, and most of them come from sales of gold bullions to central banks. Therefore, global banks sold it considerably when it reached a peak price.
On the other hand, the production of gold from mines is in constant decline from the beginning of new millennia.
According to most studies, the mining output fell to 100 tons between 2000 and 2007. Even though the new mine appeared, it would require at least a decade to bring it into production. When the supply of gold reduces, the logical situation is that prices will fall.
- The Demand Is Rising
Even though the supply is limited, the demand is increasing as time goes by. Due to emerging market economies have increased their wealth, the overall demand for gold increased significantly.
Most of these countries just started to buy and hold gold for the sake of investment. For instance, India is the largest gold-consuming nation in the world due to numerous uses from bullions to jewelry.
When the wedding season starts during the October that is the time of year when the demand rises significantly, at the same time, in China, the traditional form of saving is in the way of gold bars, and since the economy is at its maximum, the demand also raised as a result.
Investors are also demanding gold due to its stable features. Most of them are investing in commodities such as gold or other precious metals as the investment class that you can efficiently allocate based on your preferences.