Gold’s Enduring Investment Appeal
Gold has kept humanity captivated through the ages. From the opulence of ancient empires to the vaults of central banks today, gold, the most precious of metals, has woven its lustrous threads through the tapestry of civilisations, as a symbol and store of wealth, prestige, and authority. Looking back at the storied history of gold and its enduring value in humanity, illuminates why gold continues to have relevance and appeal today as an investment asset for investors seeking to safeguard their wealth in a world of uncertainty.
The Legacy of Gold
Gold’s allure dates back to the earliest human civilisations, where its rarity, durability and beauty set it apart from other materials. Gold was applied to decorative objects, jewellery and ceremonial purposes. Egyptians were metallurgical masters and adorned their pharaohs and deities to honour their authority and symbols of eternal perpetuity. The Aztecs used gold for ceremonial purposes. The Magi brought gold as one of their three gifts to Bethlehem.
Beyond the cultural and religious significance and ornamental applications, gold was used as a medium of exchange and store of value. The earliest use of gold as currency dates back to the Lydians in 6th century BCE who minted the first gold coins. The Greeks and Romans recognised gold’s intrinsic value and minted coins stamped with the images of their emperors and established these gold coins as a medium of exchange. As trade routes flourished, gold facilitated the exchange of goods and services across nations as the preferred form of transaction currency. This set the foundation of the gold standard.
The Birth and Demise of the Gold Standard
The gold standard is a monetary system in which the value of the country’s currency is pegged to a specific amount of gold. The gold standard emerged and rose to prominence in the 19th and 20th centuries as a monetary system with the aim of providing stability and facilitating international trade and foster economic growth. Nations which adhered to the gold standard pledged to maintain gold reserves to support the value of their country’s currency and ensure convertibility.
The gold standard however was not without its challenges, as it constrained policymakers’ abilities to respond to economic conditions and gold supply fluctuations could lead to deflationary pressures. The outbreak of the two world wars and the Great Depression ultimately led to its final demise in the 1970s.
Gold as an Investment Asset
Even as the gold standard for the international monetary system has been abandoned for a system based on pure fiat money, gold has persisted as a significant reserve asset for most central banks. Gold remains a steadfast choice investment asset. Gold is a safe haven and an enduring store of value. Gold serves as an inflationary hedge or investors seeking refuge against macroeconomic uncertainty, geopolitical risks and the impact of central bank policies on fiat currencies.
Gold continues to be highly regarded as a precious metal due to its scarcity and finite supply, supported by global demand, juxtaposed against fiat currencies which are subject to the discretion of central banks’ evolving policies. The inclusion of gold in balanced portfolios mitigates the risks of stock and bond markets as an uncorrelated asset and is an ever-useful diversification tool.
Final Thoughts
As we contemplate the golden thread that has woven its iridescence through humanity’s history, gold’s enduring role as a store of value and an investment asset continues to be critically relevant in today’s economic environment. Against the backdrop of economic volatility, geopolitical tensions, inflationary pressures and global uncertainty, gold has stood the test of time through these cycles of history and remains still, a safe haven asset and diversification tool for investors seeking to mitigate risk and preserve their wealth.
For those interested to include gold as part of their portfolios, Gold Tokens are now listed on the SDAX Exchange. These Gold Tokens are securitised, issued by an independent trust and backed by physical gold bullion held at Freeport vaults in Singapore.
Visit https://www.sdax.co/gold/ to find out more.
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