Although empires fall and are replaced by new ones, investment gold and precious metals have maintained their value as investment assets throughout the upheavals of world history. In a digitalizing world, money and assets are mostly binary numbers of account data, but gold still offers a tangible return on investment.
Gold has been a popular investment for over 2000 years, and nations and central banks have relied on this valuable precious metal. Physical gold is a relatively stable investment, as unlike stocks and currencies, its value is not dependent on natural disasters, volatile political situations, or rapidly changing economic conditions. It is indeed a good safe-haven investment.
A physical gold bar is a valuable gift
What then is the basis for gold's current valuation as an investment?
Although the currencies commonly used in trading are no longer tied to the gold standard, gold retains its value better in the long term than, for example, the mentioned ones and zeros in a bank account, not to mention cash.
Physical gold is and will remain valuable even if currencies are devalued or the economy faces hyperinflation. A gram of gold will still be a gram of gold in 50 years, whereas a 50-euro bill will hardly be worth anything at that age. Thus, gold also holds unmatched value as a gift investment.
Physical gold is available immediately
Gold can be invested in paper form – either by investing in funds that in turn invest in physical gold – or by buying shares of gold mining companies. In Europe, funds must trade securities, so investments in the gold market are made through derivatives.
However, the problem with paper gold is its unpredictability compared to physical gold. Gold owned through funds cannot actually be accessed, but in practice, the owner of paper gold owns the market value of gold, meaning a promise that gold exists. Physical gold, on the other hand, is always available.
The gold bar stays in the pocket
The value of paper gold may develop in a completely different direction than the value of physical gold in a crisis situation, such as hyperinflation. The difference between paper gold and physical gold could thus be summarized by the old saying about catching ten on a branch instead of one.
The demand for gold has continued to grow steadily. Physical investment gold is also easy to sell if necessary. As an investment, gold is tax-free, and thus does not cause unexpected turns due to various changing tax treatments.
