Before the governments of various countries started printing currencies, traders required some way for trading and exchanging goods, such as gold. However, they did not start with the yellow precious metal. On going through history we realize that man tried a large variety of items which could be employed as money, including cereals, fruits, salt and candy. Finally, it was only the precious metals such as the yellow precious metal that solved the purpose of financial instruments. Other than the reasons already mentioned, the ore was lightweight, could be carried around easily, and be used even on becoming wet, and couldn’t be forged. It could be stored and stacked conveniently and thus found acceptance of various cultures. God naturally played the expected role without any diktat from anybody.
These basic characteristics held and will continue to hold status of yellow ore above currencies, stock exchanges plus economic disasters. Gold doesn’t require FDIC insurance and banking systems can’t hold its “fractional reserves.” The yellow precious metal could survive and retain its worth during world wars, natural calamities like plague, depressions, recessions, industrial revolutions and even the innovation of currencies.
What History Teaches Investors
How does all this matter to investors? At the time of writing this, gold was priced at more than $1,291/ounce.
This price is far less than its peak price during the end of 2011 and still lower, compared to its price about ten years ago. Initially, after Gold Standard was rejected, and the precious metal was left open for market pricing, its price increased, while the dollar lost over ninety percent of its buying power during the same timeframe.
None can foretell at what price the metal would sell thirty-five or even five years from today. What investors may learn from history is the yellow ore shall maintain its worth forever and its value has always amplified over a long period of time.