Money is so integrated in our society that we rarely stand still to reflect on why the piece of plastic or paper in our hands allows gives us purchasing power.
One of the first forms of currency, the Mesopotamian Shekel, consisted of stamped silver and gold coins. There were several reasons that gold and silver were chosen at the time:
- Rarity — Gold and Silver are abundant enough to create coins but also rare enough that there’s not an unlimited supply. There is just a limited supply of gold, and only a limited amount of around 2,500–3,200 tons a year that can be mined, unlike the Federal Reserve, who can print trillions more with the strike of a pen.
- Tangible — Although some cryptocurrencies do provide the same rarity, they are unlike gold, just pieces of code. Gold is a tangible asset that can be held in your hand and has been valued for not only centuries but millennia.
- Noble Metal — Gold is a noble metal, that unlike Iron, Copper and Aluminium doesn’t corrode. Also, it’s melting point means that it can be melted over a flame and easily transformed and stamped into coins.
- Jewellery – Aside from the investment perspective, gold is also actually also used to make beautiful jewellery and mixed with different metals to create the exact required properties.
Although we don’t walk around paying with gold coins anymore, because of the above, no other form of money or currency as outlasted precious metals as a store of value. This is essential since you want to make sure that you hold money or assets that retain it’s value over long periods of time.
Inflation
This brings us to the topic of inflation. Every year your money loses a little bit of ‘purchasing power’. Gold is and has been what they call an inflation hedge. They even say that an ounce of gold bought a nice toga in the times of a Roman Empire and it is still true you can buy a nice suit even today.
The reason for this is that gold production is limited, and not a single person or government can easily produce more. That is why, initially when governments started issuing paper money, they agreed to have it fully backed by gold. You can even see this on some old notes.
However, the US stopped this practice in 1933, meaning that they could create money, without having it backed by gold anymore. As the US government printed more money, gold became more expensive in USD. So, if you held your money in cash, you would be able to buy less and less every year whilst gold remained to be a good ‘inflation hedge’.
Diversification
Although we would obviously love to tell you that you should put your entire live savings into gold, we would definitely not recommended it. You should attempt to diversify your savings as much as possible. The reason for this is that gold, and other investments vary in value. You never know when Tesla stock might lose half of its value. Vice versa, you also don’t know if it might double the next time Elon Musk tweets.
Whenever making an investment, it is critical to maximise the profit your making whilst minimising your risk. The easiest way to do this is to ‘diversify’ your assets. Let’s say you do hold some famous Tesla stock and Elon Musk is again tweeting and accidently reveals in advance that their sales are not as much as expected. This would have a negative effect on their stock, but it might be good for General Motors, who would have a positive effect on their stock.
Holding around 5–20% of your assets in precious metals is a widely acknowledge principle to diversify your wealth. The rest should be a mix of real estate, equities and bonds. How much should I own you ask me? That all depends on how much risk you want to take…
Are my metals safe with 24 Gold?
Speaking of risk… I hope you asked yourself the question of whether your metals are safe with us. You should in fact ask this question whenever you do make an investment!
Aside from strict compliance with DMCC regulation we make sure that your funds are stored in a segregated account and that all your physical metals are stored in secure locations and are fully insured. We continuously invest to make sure that we do provide the best security, both physical and digital and that we always have a one-to-one ratio of metals in our vaults and in our databases.
Finally, we also want to make sure you get the best possible pricing necessary. 24 Gold comes from generations of experience in the sector, so we want to make sure it can be used by both professional gold dealers but also consumers. Hence, we make sure that we provide all of the above at unparalleled prices.
How do I start?
You can start as soon as you’re ready. Do contact us and we’ll attempt to get your account open in no time! Our expert team will guide you through all the necessary steps and also will advice you on how purchasing gold can best supplement your particular situation.
Do visit our website for more information.
