There’s more reasons to buy gold than the hair on my head.
It’s a durable, tangible, hard asset that can be stored as a hedge and possibly offset losses due to inflation, currency debasement, or bearish times afflicting the stock market, for example.
In general, there are two main reasons you should invest in gold and they are inextricably connected with each other.
Gold’s historical performance and it’s potential demand.
Gold’s potential demand Gold is already used in one of most important industries nowadays, electronics. That includes computers, phones, data servers, and others. Covid19 forcefully redesigned the way we live and the way we work. We don’t just need more computers, phones, and servers, we also need them to be powerful and indestructible.
Gold makes that possible.
Gold is also being used to cure cancer, produce oxygen in Mars, in dentistry, medical devices, cars and others.
Demand for gold will continue to rise BUT supply won’t. Our supply of gold is limited and there is no technology on Earth that can produce gold in a lab, unlike diamond.
And if you remember your Economics 101, limited supply and high demand equals astronomical price.
Gold’s Historical Performance.
If we look at how gold has stacked up over the past 50 years versus other asset classes such as equities and bonds, it’s indisputable fact that it has increased in value.
In fact, since President Nixon removed the gold standard in 1971, gold price per ounce has shot up 4,900 percent, compared with roughly 3,500 percent for S&P 500.
Gold’s by no means the end-all, be-all because there have been lows. Gold has depreciated in the same time span, particularly in the 80s and 90s when stocks and bonds were yielding returns in the low-teens.
Even a small downturn in gold can be a positive sign, though, since it has historically been over periods when bonds and stocks do well.
Thus, in a nutshell, the big picture in the economics of gold speaks to its core abilities — and that is gold’s limited supply keeps its value up, as it remains as solid as the ultimate safe-haven asset in the world.