Gold as a store of value

4月5日

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The main purpose of gold nowadays is to create a so-called "gold reserve" to preserve the purchasing power of owner's wealth in challenging situations in the world, such as wars, economic recessions or even coups.

Let's ask ourselves a question. Has gold ever been worthless ?

If we'd look back in history, the beginning of using gold dates back to somewhere between 4-5 thousand years B.C. in India, when it was added as an additive to some medicines. Later on, it also appeared in the Sumerian or Roman Empire, Egypt and China.
Gradually it's also used for decorative purposes (weapons, tombs, vessels).

Gold was firstly used in the form of gold leaf, cubes or bars. As time passed, also gold coins were minted. The golden "empires" in using gold coins at that time were Persia and Carthage.
Coins were gradually minted all over Europe - France (franc), Germany (gulden), England (florin), Spain (pistole), Russia (imperial).

History shows us that gold's always had its own place in the world and has had many uses since ancient times, where it became established mainly as a precious metal that brought status and wealth to its owners.

After turbulent years, starting in 2020, gold has once again shown its power and gained in popularity.

Everyone has to answer for themselves, whether it's an ideal time to buy gold. When buying gold, the investor should mainly consider the purpose. This is where I see a lot of importance. Gold could be a great addition to investment portfolios for long-term investing. Investment specialists state that the allocation of gold in a portfolio should be up to 10%.
In the short term, whether speculative or investment, gold doesn't make as much sense to me.

Good news is that, even after so many years of 'inactivity', gold still has a presence as a valuable investment, despite the fact that nowadays we already have many other instruments that could complement or replace this precious metal over the years, such as bitcoin.

But that's a whole other topic.

Source:
Journal of Private banking TB