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Why is Gold Such a Popular Investment? - Gold Bullion Co.

Why is gold such a popular investment?

Buying gold bullion has been a popular investment since they were first created.  The exact period when these bars appeared has been lost to time, but it is known that civilisations as far back as the Roman Empire used gold ingots to facilitate trade and as stores of value.

In more moderns times, we know that the Bank of England was using the refining company of Browne and Brind as an official source of 200oz bars of gold by 1810.  400oz bars were referred to in books from the 1830’s.

Why Buy Gold?

Today, gold continues to be a popular investment vehicle, but why is gold such a popular investment?  Let’s look at some of the reasons why you should look to invest in this precious metal.

The Insurance value of gold

To understand why gold bullion is a fundamentally secure investment, it makes sense to understand a little about paper currency.

Many years ago, currencies were linked to a physical supply of gold held by central banks. The notes in your pocket could literally be exchanged for gold.  As the banks were secure, there was little need to actually be in physical possession of the gold yourself.

Fiat Currency is Based Largely on Belief

Most of today’s currencies, including the Euro, the British Pound Sterling and the US Dollar are not backed by anything other than the finances of the issuing countries. The money in your wallet is in intrinsically valueless.

If confidence in the Government’s ability to pay its debts falls, then we are likely to see a similar fall in the value of a currency.  For instance, the collapse of the Deutschmark in the German Weimar Republic, the fall of the Euro during the bailouts of Greece, Portugal, Spain and Ireland, and the severe inflation seen in nations such as Zimbabwe during their various political crises.

Your Gold Investment Retains Physical Uses That Maintain Market Demand

Despite some price fluctuations, gold has retained a relatively strong value and remains in demand for both sentimental reasons (for instance jewellery) as well as for a number of industrial processes, something that cannot be said for paper currency.  Whilst it posses these uses, Gold investment should be viewed primarily as a low-risk security asset for yourself and your family’s future.

Physical Control of Wealth.

By owning gold bars, you are taking physical ownership of the source of your own wealth.  Bank deposits in the UK, for instance, are only secure up to a value of £85,000. If you hold more than that in one bank, you are not guaranteed to get your money back from the bank if the bank collapses due to the mismanagement of the bank’s business.

Similar things can be said about investments such as gold exchange-traded funds (also known as ETF’s)

If you own your own gold and keep this securely at home, or in a fully insured bank deposit box then you can guarantee that you are in control of your own financial destiny at all times.

Gold as an Investment

Gold demand is growing and the supply is lessening. Gold is also seeing a growth in demand in countries with growing economic activity such as China.  As a nation, China now owns 528 tonnes of gold. France has seen gold bullion and gold coin ownership rise by a phenomenal 1,600 percent, but still lags Germany, which remains Europe’s top gold owning nation.

Whilst you can never entirely guarantee the future, with gold prices rising as global demand and instability grow, moving into gold could be the best move you ever make, it will certainly allow you to explain to your friends why is gold such a popular investment?