Gold has long been regarded as the universal symbol of wealth, and the resource has been shaping global economies since before the history books were even written down. But does that mean that gold is still a good investment in 2022? To answer this question, we need a bit of background into the precious commodity and how it performs as an investment asset.
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Where Does Gold Fit into the Modern Economy?
Gold is a form of investment whose value is not tied to any one global economy and its value can thus be preserved over very long periods. Not only does it make for a good long-term investment, but gold trading has proven an extremely lucrative practice. For those with the funds to invest in gold, it may be worth looking into how to trade in gold. Luckily there are many online guides available that can help steer you in the right direction and help you avoid some of the pitfalls of trading in commodities. But why is gold such a good investment? To find out, we need to look at the history of this global commodity.
Why Is Gold Such a Good Investment?
Gold was first recognised as a standard unit of exchange in 1500 when it was used to grow and expand the gold-bearing region of Nubia. It was also highly coveted and collected by the Ancient Egyptians, who used it to craft jewellery and religious artefacts. However, gold only started being used as a currency when merchants started trading it as a standardised form of money in 560 BC.
In 775, the British used gold for the formation of the British pound. In the Americas, gold was used to establish the bimetallic standard, which intrinsically linked every monetary unit to a measure of either gold or silver. This was the standard from 1792 until the 1900s when gold started to be transitioned out of the monetary system. Even though the US abandoned the gold standard in 1971, gold is still to this day seen as an important commodity in the global economy.
What Are Some of the Main Advantages of Gold as an Investment?
While gold’s long-term staying power is one of its major advantages, it is not the only reason to invest in the precious metal. In such turbulent economic times, gold is used to preserve wealth due to its ability to appreciate against rising inflation levels which have a negative effect on paper-based currencies. Gold is also used as a dividend-paying asset by investors who hedge their bets trading gold stocks. Any fluctuations in the gold price are magnified in gold-stock prices, meaning that even small increases in the gold price can lead to significant gains for stock owners.
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Gold has long been seen as one of the most popular forms of investment. Aside from being used as a safe haven against rising global inflation, it is frequently used in conjunction with other stocks and bonds to help diversify investments and more. And while timing is important when looking into buying gold, there are a number of ways it can help your portfolio in 2022.