Gold always plays an economic role in a country. It is no longer the main current currency but remains a long-term investment. Gold is a significant solid value when the financial markets fall and has remained the universal currency for centuries.
The gold was reference value for more than 15 centuries and until 1944. It was even considered by man as the world’s reserve currency. When the Bretton Woods agreement was signed, the dollar replaced it, but it remained a backup value for world currencies in most countries. In 1971, the gold standard was withdrawn by Richard Nixon the United States. Other countries, such as the United States, started it in the following years. Gold remains a safe monetary value in coins or bullion without VAT in European countries.
The Benefits Of Investing In Gold Today
Although gold is not a currency, it is a popular safe haven for many reasons:
- In terms of liquidity, physical gold remains convertible everywhere very easily
- The value of gold remains almost constant, unlike fiat currencies
- Gold is a hedge against inflation because it has a price in US dollars, and if the dollar goes down, the cost of gold rises. It is, therefore, a much more stable investment than a currency.
- Gold permits you to change your portfolio and thus vastly reduce investment risks.
- Gold is a universal investment for all countries, including those experiencing robust political chaos
- When gold increases, the local currency is often devalued and remains an additional protection
- This value is also a component of products such as jewelry, electronics, etc.
The gold coin makes it possible to constitute a stable inheritance. It is easy to buy it and resell it when the need arises. The sale is at least equivalent to the purchase price or becomes higher most of the time. The coins of gold are also known as RareCoin. Today, it is even possible to resell gold coins in a few clicks on the Internet on specialized sites. A numismatist, or stockbroker, is required to sell a gold coin that is more expensive than it costs. The positive premium for gold coins has been substantial, with Napoleon reaching 80% in 1980.
Gold bullion is a safe bet, but it is more difficult to resell than the gold coin. It cannot be split, but its holder does not experience any risk of loss, unlike paper gold investments. Gold bullion is an investment accessible to everyone, but it must be kept for the medium or long term. Gold bullion does not generate periodic income, so investors are advised to devote only 5% to 15% of their portfolio. Investing in gold coins rather than bullion is also advisable so that resale is more straightforward in case of need for cash.
The only major drawback of physical gold is its storage to keep it. The parts must remain in excellent condition and protected from dust, wind, and other bad weather. They are generally stored in sealed plastic, allowing them not to knock together to not be scratched. The ingot must also be protected. It is strongly advised to keep it in a bank safe.
Even if gold is a safe haven and you have to have some of it in a portfolio, it has some drawbacks:
- This precious metal can create a bubble when the economy is disrupted. Investors flock to gold, it becomes too expensive, and other investments lose value
- Gold generates no income and can only be sold when it rises to create a capital gain
- Physical gold must be stored and insured because, in case of theft, there is no recourse
- Gold generates taxation of around 30% or 10.5% of its value if there is no purchase invoice
The best time to buy gold is when inflation is coming. The sooner, the better to make money. It is necessary to monitor market indicators such as stock market declines and various political turbulences to realize this. These indicators can be signs of a currency’s future devaluation. If the coin is strong, gold does not rise. Still, there are expectations for electronics and jewelry, and gold may increase. You must buy gold when it falls and hold it for a long time.