Gold is an asset that is seen specifically by many investors for centuries or thousands of years as a protector of wealth. Gold investment offers a promise that gold will not go bankrupt because gold is a medium of exchange that others will always accept in trading transactions. Basically, the idea is quite correct, but investors should consider how much they can overcome a crisis or other bad events by buying gold.
The Ambiguity of Inflation and Gold Relationship Inflation generally refers to the increase in prices of goods and services in a region continuously over a certain period of time. This inflation indicates that the value of money from time to time decreases.
How valuable is gold in times of crisis?
One reason people buy gold is that this precious metal is considered to have real value, while the value of paper money and metal is basically just a “trust value” because its intrinsic value is far lower than the stated value. Therefore, in conditions of crisis and trust in the government plummeted, then the money may be considered worthless, but gold will remain valuable.
In addition, gold actually also has several problems during a serious crisis such as the precious metal is heavy, inedible, unusable and cannot be used as a shelter. In addition, if the government collapses and there is widespread chaos, gold may not be of high value anymore because it is difficult to store safely.
What are the Best Benefits of Gold?
Just because gold is not a perfect asset to be used as a hedge of assets, does not mean that precious metal has no value at all and is useless. Here are some of the best benefits of gold:
– Gold could be an alternative in the midst of mistrust in the performance of the Government when political and economic conditions are unstable.
– Gold functions as a protective asset (safe haven) when national and global financial turmoil occurs.
– Gold can be used as an investment portfolio diversification because it has a distinctive character that is different from other types of assets such as deposits, stocks, bonds, and so forth.
True gold is safe protection to have while waiting for economic growth to recover. Many investors consider gold precious metal is the only attractive financial asset in the midst of a worsening economic situation, which means the gold precious metal is a good investment type if the investment timing and conditions are right.