The traditional use value of gold, as a primary currency, is no longer in use today. The current value of gold is reflected in the preservation of financial capital, both for individuals and states. In other words, gold represents FINANCIAL SECURITY. Throughout history, gold has proven to be the best protection in both periods of high inflation and deflation. (Inflation represents a general increase in prices, which results in a decrease in the value of money… Deflation represents a reduction in money supply, which results in an increase in the value of money.)
Investing in investment gold is also used by a certain number of investors as a form of financial security for their future. This trend is noticeable among middle-aged investors who want to increase their income in retirement. These investors purchase investment gold in formats suited to their financial capabilities. Their plan is that, once they retire, they will cash in one gold bar or coin each month and thereby supplement their income. For this purpose, gold bars of 10g, 20g, 1 ounce, and 50g are most commonly purchased.
Investors invest in gold for the following reasons:
- The price of gold shows a generally stable long-term growth trend.
- Gold is one of the best safeguards against economic uncertainty and financial market risk.
- Gold is not an abstract financial instrument but a physical asset that is easily transferable.
- Gold is an increasingly in-demand investment product worldwide. In the past year, demand for gold in Europe has increased multiple times.
- Gold can never become worthless; it is timeless.
- Gold can be traded and sold worldwide.
- Gold is not subject to various charges and limitations like other forms of tangible assets.
The right time to buy investment gold is when you have available funds that are not actively invested. In other words, when you have savings that are not generating returns. This is money that is not economically active and is gradually losing value on its own. In effect, money depreciates due to inflation. What does this mean? Nominally, you may have the same amount of money at the beginning and end of the year, but the quantity of goods you can buy with it decreases significantly due to the general rise in prices—inflation.
Investing in gold is a globally recognized way of preserving value. Today, gold is mostly sold in investment form worldwide. Investing in gold is not an investment in the strict sense, but rather an insurance policy against inflation, currency collapse, and other extreme crises. You do not invest in gold primarily to earn a return, but as a way to hedge your investment portfolio, where gold serves as a hedge against risky investments such as stocks, bonds, and other securities.
It is recommended that every investor allocate 20–30% of their assets to gold, with the remainder invested in stocks, bonds, real estate, and business. One should never invest all funds into a single asset class. Any increase in the price of gold above the inflation rate during a given period represents additional profit.
In the long term, gold has proven to be an extremely stable and reliable store of value against inflationary shocks, which paper money is particularly vulnerable to. One ounce of gold could buy almost the same value of goods two centuries ago as it can today.
