Although it may seem a tad medieval, gold still plays quite a role on the modern economy. In fact after the market crash of a few years ago gold has started to have more of an impact than ever before.
This is all down to the gold standard system which uses a country’s gold value to directly assess the relative net-worth of their paper-based currency. In fact anyone who has a paper-based currency can exchange it for an agreed amount of real gold.
The benefit of this system is that it creates a fixed asset which in turn self-regulates, so basically a government can only print out as much paper-based money as it has in gold.
This discourages inflation and government-created budget deficits because they can’t exceed their supply of gold. Although this may seem ideal a lot of countries have actually moved away from this and use solely paper-based financing.
But after the recession and the ensuing credit crunch, a few governments and outside investors have started to move back towards gold.
Although gold is considered by many in the economic world to be a commodity and not a currency, the idea is starting to spread that gold might be a more stable currency than paper money.
After the decline in various stock prices because of the ongoing conflict between Russia and Ukraine, plus the recent news that Sterling has started to dip with the Scottish Referendum, you would think gold would have taken quite the economic hit. But it turns out that the value of gold has barely been affected at all. In fact gold has started to climb up a few points in worth. It currently stands at £1,256.88, a huge mark-up from £1,188 in 2013.
But what has caused such an increase in the value of gold?
The increase in the value of gold is arguable down to a number of factors. First off there’s the fact that gold is considered by many investors to be a stable currency since it rarely changes in value regardless of how the rest of the market is acting.
This stability has led to an increasing de-dollarization of the stock market as investors have started to move away from the dollar as the markets preferred currency. This in itself was also brought about by the $400 billion natural gas contract that was agreed by Russia and China. Investors saw the inevitable increase of gold with Russia looking to become the biggest oil provider and so jumped ship.
Another factor boosting gold values is the fact that there’s on-going concerns about the US government’s usage of liquidity injections into their economy to try and keep it afloat.
This in turn only helps to encourage the move away from the dollar and dollar based items as their economic stability and plans for the future are coming under question by investors.
So you may be wondering, why bother investing in gold stocks?
There are a few reasons you should invest in gold. First of all it’s not called the ‘crisis commodity’ for nothing. Gold is always popular to investors and is generally a safe place to invest your money. Just as graveyards need corpses, we will always need gold so its worth will rarely decrease.
Gold is also a pretty low maintenance investment too, as unlike other stock options where you have to regularly check the flow of the market you rarely have to worry about gold as it usually just sits and accrues stock value since it’s a great bet against inflation.
The gold market will never crash unlike other investments, so you can buy stocks in gold safe in the knowledge that your money will never be affected since gold is a universal commodity that’s always popular all over the world. Gold also adds a touch of diversification to your stock market portfolio so if any of your other stocks slip in value you’ll always have your gold to fall back on.
Gold investments can come in many forms, you could have stocks, bullion or coins or even an IRA Gold account. The IRA investment option is a retirement account that many choose to use as a nest egg for the future.
Investments into this account can take the form of coins, bullion and stocks or if you prefer you can use a 401K and combine it with a trust company that knows how to invest in gold. You can even use specialist websites like www.goldiranavigator.com for example to find the best information and deals for setting up an IRA Gold account.
Overall gold will continue to be a viable and trusted source of investment and future financing. Although its value may change in the coming years, it will always be of a relatively high value unless something cataclysmic happens. So if you’ve ever thought about starting out with stocks, why not give gold a go first.