With Bitcoin being in the news as a digital replacement to the real thing, many investors have been rethinking their investments. The price of the cryptocurrency reached 64 000 dollars a few months ago, and there are two opposing sides.
On one side, you have the people who think that digital currency will take over the world as a new method of payment, and it will change the way we think about the economy forever. On the other side, there are people that think it’s completely worthless and it serves no purpose. Click here for more info.
However, whenever two people are arguing, the third one takes the spoils. That’s why we’ll be talking about gold, which is the silent mover and which has been with us since the start of civilization. This asset is limited, and the demand for it is growing each year.
As any smart investor knows, where there is a lot of demand and limited supply, the price must go up. This is a basic law when it comes to economics, and it makes sense to diversify your portfolio of stocks and bonds with something that has withstood the test of time.
At the moment, many new investors think that precious metals are an archaic way to invest your money since that is a thing of the past. Ever since 1971, the United States has left the Gold Standard in exchange for fiat money. This means that the basis for the buying power of the dollar is trust in the government and banks.
However, with this pandemic that took the world by storm, that’s changing. People are less inclined to believe these institutions. Plus, there’s the whole issue with the stimulus checks that cost more than two trillion dollars. This means that another inflation is coming.
The only question is when it’s going to happen. Whenever a crisis is lurking in the background, the thing that rises to the occasion is gold. The price of this precious metal skyrockets as soon as the stock market plummets and the real estate bubbles start to pop.
The same thing happened in 2007 and 2008. For the people that think this metal is only used for jewelry, another important fact is that it’s also used in electronic equipment such as computers, laptops, tablets, and phones due to its conductive abilities. If you want to be in the investment game for long, then this is definitely an asset that you need to include.
We must look back at history if we want to understand the future. The same thing is true about this topic. The history of gold officially begins 4 000 years ago when the Ancient Egyptians used it to make jewelry. Follow this link for more info https://news.yahoo.com/8-things-know-invest-gold-202015392.html.
They made necklaces and bracelets, and they covered the pharaohs with this metal because it reminded them of the sun god Ra. With time, the Europeans started traveling, and they realized that they could use this metal as a medium of exchange.
This happened around the year 560 BC. That’s when coins started to circulate. The kings stamped the coins with their unique seals to ensure that they were credible. The punishments for falsifying them were severe, and that was to enforce a centralized way of distribution.
When merchants started transacting with them, the start of the free trade economy was born. Other countries started to adopt it, and as a result, the demand and the price of it started to increase. There are thousands of relics from the Ancient Greeks and Romans that tell stories about it.
Plenty of them have been saved, and they are displayed in many different museums. Eventually, it started to spread around Asia and Africa, and finally, the American continents.
The Bimetallic Standard
If we fast forward to the modern history of 1792, we get to the bimetallic standard. This means that everything money-related needed to have a basis in either silver or gold. This made things easier. You didn’t have to carry around a leather purse that was filled with heavy metals to make a payment.
Instead, the government started to print money. That’s when the dollar was born. At the start, one dollar was the same as having 24 grains of gold. This means that the paper you held in your hand was completely the same as giving somebody a piece of this metal.
However, as the economy started to progress, countries wanted to make manipulations. They wanted to transition away from this system and enforce something that would be based on faith and trust in the institutions themselves. In 1913, lots of promissory notes were printed and handed out.
That’s completely the same as the current state of fiat banknotes. Then, 60 years later, the US completely abandoned this system. There have been plenty of discussions about whether this was a good idea or not. The only thing that we can agree on is that it happened, and we have to live with the consequences.
The Modern Economy
The reason why this matters in the modern economy is because these standards have been used throughout history. It’s not easy to wipe out thousands of years of transactions in less than fifty years. The symbols of wealth are still associated with jewelry, bullions, and coins.
The value of gold will keep increasing, and the value of the dollar will keep decreasing because of inflation. That’s why you need the best gold company to invest in for this period. This simple law of economics states that you will lose 2 percent of your cash every year. That’s why many people decided to put their money into a bank.
However, with low-interest rates, that’s not something that will make you retire rich. This is why there are investment options such as IRAs, pension funds, 401k, as well as the stock market. One thing to note is that politics now have more influence over the value of stocks and bonds than any other time before.
With the internet, the news spread like wildfire, and investors are quick to cash in their money, and the risks are getting higher and higher each day. For this reason, investing in something safer that serves as a store of value will be the thing that keeps you afloat.
It serves as a hedge against the dollar and any scenario that might undermine it, such as inflation. This is a hard asset that will continue to rise during unstable times, and especially now when there is a lot of economic instability.
If you’re someone who wants little to no risk with a guaranteed slow profit, then precious metals are the way to go. There are many companies that offer dividends that might give you an even better ROI in the future.