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5 Reasons You Must Own Gold
Gold has been controlling the economy of many nations and has been present in our society as a valuable metal. The presence of gold in history has been reflected in all civilizations. The first gold coins were introduced in 800 B.C., and since then it has become an important part of treasures of the Kings for the era. Even today, the governments fall back to gold during inflation to stabilize their economy. Here are five reasons why you should be investing in gold.
Gold is way apart in its value compared to paper currencies. One major difference is that gold has always maintained its value through the years, unlike the unstable paper currencies. Because of its stability, people have been converting their money to gold to preserve it for their future generations. Gold has a comparatively low melting point and has a unique color than other elements. It can be converted into jewelry and coins easily.
When the prices for the products starts declining, and the economy goes under excessive debt like when it happened in the 1930s, the value of gold has been surprisingly found to be increasing while other materials see a decline in their values. Maybe, because of its attractive color and distinctive properties which were helpful to figure out the theory of relativity, people tend to fall for this element more than anything else.
Value
Gold is way apart in its value compared to paper currencies. One major difference is that gold has always maintained its value through the years, unlike the unstable paper currencies. Because of its stability, people have been converting their money to gold to preserve it for their future generations. Gold has a comparatively low melting point and has a unique color than other elements. It can be converted into jewelry and coins easily.
Inflation Hedge
Gold has been a savior of the governments during the time of inflation, the reason behind being its price, which tends to rise along with the cost of living. Gold has been accepted by the governments as a good store of value, and people are encouraged to buy gold when the paper currency starts to lose value. Gold tends to be priced higher because when a currency dies, the government used gold to estimate the value of things, and hence, its own value rises.Protection from Deflation
When the prices for the products starts declining, and the economy goes under excessive debt like when it happened in the 1930s, the value of gold has been surprisingly found to be increasing while other materials see a decline in their values. Maybe, because of its attractive color and distinctive properties which were helpful to figure out the theory of relativity, people tend to fall for this element more than anything else.
Geopolitical Uncertainty
Gold is capable of retaining its value during geopolitical uncertainty. Due to the changes in geographical division of nations through the centuries. People move to the other countries during the crisis, and in this time, gold can be one of the beneficial commodities to take along as its value is stabilized. During the crisis faced by the European Union, gold experienced major price increment. The price of gold tends to increase in any government crisis.
Increasing demand
The demand for gold has been reported to increase in the past years due to the emergence of market economies. India has been a giant in the trade and consumption of gold. It has been famous for its gold jewelry and often boasts the use of gold during special occasions. Investors have also started showing more interest in gold trade. Gold also helps precious by many governments for the time they will have to deal with any crisis of any sort.
Factors Influencing A Drop In The Economy
The economy of a country can depend on several factors, and the collapse in any one of its segment can result in the downfall of the economy of a government. Economic collapse can occur due to national or regional economic breakdown because of the instability of the economy for a long time. During this time, the country suffers social unrest, bankruptcies, trade loss, currency violation, and social chaos due to unavailability of resources. The government should identify the major causes of economic breakdown and work towards improving the solutions for such causes at a constant rate. Here are some of the reasons which cause a drop in the economy.
Higher rates of unemployment in a country can become a major issue for the collapse in the economy. Unemployment occurs because the industries experience a huge loss due to less demand for the products and don’t require more workers. Due to fewer workers, the factories face incompetence in manufacturing their products, and the cycle continues. This might seem like a small issue but can affect the economy if the cycle continues for a long time, and it will be hard for the economy to recover back.
When the investors face a tremendous loss in their invested market, they lose confidence in putting more money into the stocks. This results to a dramatic decline in the stock prices and overall brings down the value of the industries. The stock market crashed occur due to a prolonged increase in the stock values which makes it difficult for the market to find more investors as they don’t want to risk their money on such stocks at minimum profits.
Unemployment
Higher rates of unemployment in a country can become a major issue for the collapse in the economy. Unemployment occurs because the industries experience a huge loss due to less demand for the products and don’t require more workers. Due to fewer workers, the factories face incompetence in manufacturing their products, and the cycle continues. This might seem like a small issue but can affect the economy if the cycle continues for a long time, and it will be hard for the economy to recover back.
High Oil Prices
The oil industry is the most demanded industry in the world as oil is essential for the production processes for most of the products available in the market. If the oil prices rise at faster rates than the economic rise, it will only lead to more decline in the economy. The oil prices and economy should go hand in hand. High oil prices can cause inflation and lead to higher rates of unemployment, leading to economic decline.Hyperinflation
Several factors result in hyperinflation. It occurs when the government allows the inflationary pressure to rise to print more money until they are unable to control it anymore. As the printing of currency goes out of control, the prices of products in the market will increase. As the prices for the commodities and service rise, and later, the government fails to maintain a balance between the capital and trades, hyperinflation occurs, which then forces the government to take debt from other countries. This is one of the major reasons which result in the downfall of the economy and is hard to gain back control over it.Stock Market Crash
When the investors face a tremendous loss in their invested market, they lose confidence in putting more money into the stocks. This results to a dramatic decline in the stock prices and overall brings down the value of the industries. The stock market crashed occur due to a prolonged increase in the stock values which makes it difficult for the market to find more investors as they don’t want to risk their money on such stocks at minimum profits.