Why is Gold Valuable

It can be a little weird at first to think that a shiny metal can be used as an investment, but gold has stood the test of time as one of the most secure available. In comparison to something like stocks, or bonds, gold is simultaneously safer and even has the potential to return higher investments at specific times.

To start, why does gold have so little risk? This comes from the physical nature of gold. Gold being physical means two important things. One, it’s finite, and two, it has zero counterparty risk. It being finite means it’s not susceptible to inflation, there will always be the same amount of gold on the planet. 

Gold having no counterparty risk means that there’s no opportunity for the bank or an investor to default. There is always a physical representation of the gold, the other party can never default on their obligations. This is all great, but it doesn’t sound like a great investment at this point.

This is where gold’s unique quality of gaining value in economic recessions comes in. When the economy falls, gold rises, when inflation booms, gold rises. This is because there is again a physical nature behind it that paper currency simply does not possess. When the dollar continues to lose value and prices rise, the price of gold rises even when its effective value stays the same. 
This is why gold is so valuable, not because it has the highest return on investment, but because it’s safe and has the potential for a high return on investment. While the stock market may serve the investor well in an economic boom, nothing is as reliable and solid as gold in an economic bust.

In An Era Of Inflation, Gold Still Reigns Supreme
Brought to you by: usgoldbureau.com
Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.