Gold has high value and is rich in history. For this reason, it is highly respected all over the world. People have owned gold for centuries for various reasons. Today, people still value gold and individuals and governments hold reserves. In most cases, gold is maintained to store value. This article outlines some of the reasons why people keep gold.
Holding its Value
The value of gold is known to be stable. It has a long history of holding its value. People convert currencies which are prone to fluctuation to store their wealth over a long time. It’s also a way of passing wealth from one generation to another. One advantage of gold is that it doesn’t corrode or rust, and it can be melted easily over a flame.
Weakness of Major Currencies
When the value of major currencies such as the US dollar falls, the price of gold increases, as people want to convert their money to gold, whose value is more stable. Therefore, people hold gold as a way of protecting their wealth from decreasing as a result of the depreciation of major currencies.
Gold Hedge Funds
Gold prices tend to rise when the cost of living increases. Therefore, gold can be a good bet against inflation. Because gold is perceived as a good store of value, people tend to accumulate it when they feel that their local currency might lose value.
The global supply of gold has been declining since the start of the millennium. Usually, when the supply of any commodity decreases, its price increases. Many people are aware of this, and they hold gold, knowing that its value is increasing.
Due to increased globalization and cross-border transactions, fluctuations in the currency of one country are likely to have an effect on other countries. Because of this, people are expected to hold more gold to protect their wealth.