Gold is considered a good investment because it is safe and a historically permanent store of value but it also must be considered a good investment because of its ability to act as portfolio insurance. When world events take turns for the worst, stocks, bonds and many currencies often collapse while gold moves higher. Gold is held by many investors because it is something they see as having zero counterparty risk, it is no-one’s liability.
Since 1971, when the gold was allowed to float against other currencies it has generally risen strongly. From $40/oz at that time, gold reached $800/oz in 1980, $250/oz in 2000 and $1900/oz in 2011. Today, it is at $1200/oz. While gold may seem to fluctuate against other currencies, it should be remembered that an ounce of gold is always an ounce of gold, whether during the times of the Pharaohs or today.
This entry is for reference only and in itself does not constitute investment advice.
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