Gold is the future because of its past. A very good past of 5,000 years over which it has been both a store of value and a medium of exchange. Currency, such as the US dollar, is certainly a medium of exchange, but it has steadily dropped in purchasing power. For instance, in 1971, gold cost $35.00 per ounce and gasoline was 35 cents per gallon. Now, in 2014, gold costs 40 times more and gasoline only costs 10 times more. So, you see that 35 dollars in 1971 buys 10 times less now while 35 dollars stored in gold in 1971 buys 4 times as much.
Gold is both a store of value and a medium of exchange. So it certainly is also a currency, which is just a medium of exchange. Historically, currency inflation is inevitable and leads to a full or partial devaluation of the currency. The time-tested strategy to address this is hedging against inflation by storing wealth in gold. Highest-quality gold has been unavailable to the masses due to its rising cost. Karatbars allows everyone to secure their future 1 gram at a time.
The main reasons to purchase gold are as follows;
Gold is money
Gold may not be part of our currency, but it is still money. In fact, gold, along with silver, is the ultimate form of money, because it can’t be created out of thin air (and thus depreciated) like paper or digital forms. And by real money, we do mean physical gold—not ETFs or certificates or futures contracts. Those are paper investments, which don’t carry the same benefits you’ll find in this article.
Physical gold is a store of value, just like silver. Here’s why.
- No counterparty risk. If you hold physical gold, you don’t need another party to make good on a contract or promise. This is not the case with stocks or bonds or virtually any other investment.
- Never been defaulted on. If you own physical gold, you have no default risk. Not so for almost any other investment you make.
- Long-term use as money. A scan of monetary history shows that gold has been used in coinage more often.
Owning some physical gold provides you with a real asset that has served as money for literally thousands of years.
Gold is not used as a currency today, but its role as money makes it superior to any currency. In fact, gold has been money longer than any currency in history. Gold has been a store of value for at least 3,000 years, while one of the longest currencies in history, the British Pound Sterling, is about 1,200 years old. Even the United States of America has used gold as money more often than not in its history.
One of the crucial promises of money is that it serves as a long-term store of value. Gold fulfils this promise better than any fiat currency. Look at how much purchasing power all major government currencies have lost compared to gold. [Insert graph here]
This shows that, since 1900, physical gold has been the best long-term store of value. There were periods wherein the short-term currencies grew in value more than gold, but over the long term, this chart demonstrates exactly why the rich have always held it. As Peter A. Burshre once famously said,
“Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man’s suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt and today.”
Gold’s price fluctuates, but its value is timeless. Consider how gold will preserve your purchasing power over the next, say, five years compared to your currency. All paper currencies, by their very nature, lose value over time. The dollars you save in your bank or brokerage account will continue to seep purchasing power.
Gold can be private and confidential
How many assets can you say that about in today’s world? If you want a little privacy, physical gold is one of the few assets that can provide it.
Gold is one of the very few investments that can be anonymous. If you choose, no one has to know you own it. Virtually any other investment you may make does not have this benefit.
Note that you must still report any gain on your income taxes
Gold requires no specialised knowledge
Can you spot a real diamond? Can you look at two paintings and tell which one is the fake Van Gogh? What stamps, baseball cards and antique furniture pieces are more valuable than others?
Gold bullion requires none of this. No special skills, training or equipment are needed to buy or recognize gold bullion.
You can buy rare gold coins, but this is the world of the collector, which most investors should avoid. You’re not speculating on a numismatic coin someday fetching a higher premium than what you paid; you’re investing in gold bullion to protect you against crises and shield you from a loss in purchasing power. No rare coins are needed.
Buying gold bullion is relatively straightforward. If you’re not sure what to buy, [start with this easy guide]
Gold can protect against nefarious politicians
You don’t have to be a conspiracy nut to understand that governments sometimes overreach. They can freeze bank accounts, garnish wages and even confiscate funds. Talk to people who were victims of these actions and they’ll tell you they had no warning.
In an economic or financial crisis, these actions increase. The government desperately needs revenue and they tend to be more aggressive in their enforcement. Or they simply pass new laws and regulations to suit their needs at the time. It’s happened with virtually every government in history, and it’ll happen again, especially in a crisis situation.
There are precious few ways to protect against such actions. But one of those ways is by holding physical gold offshore.
Diversifying internationally sounds complicated, but storing some physical gold outside your home jurisdiction today is not difficult. It’s as easy as opening a bank or brokerage account. And by doing so, you buy yourself some time in a worst-case scenario. Even if you never have to use this “Plan B” money, it’s like an insurance policy against aggressive or unfair political actions. You could even someday use the proceeds of any sales to invest in other options that may not be available in your home country.
It’s a good idea to keep some of your wealth outside the banking system and also outside your political jurisdiction. Professional vault storage offers you a viable and straightforward way to do just that. It’s not a panacea, but it can put a layer between you and heavy-handed bureaucratic actions. The catch is, these preparations must be put in place before anything happens.
Physical gold is a hard asset
Of all the investments you own, how many can you hold in your hand?
In a world of paper profits, digital trading, and currency creation, physical gold stands in contrast as one of few assets that you can carry in your pocket anywhere you go, even in another country. And it can be as private and confidential as you want. Physical gold is also a tangible hedge against all forms of hacking and cybercrime. There’s no “erasing” a Karatbar, for example, but that can certainly happen to a digital asset.
Gold is More Practical For Everyday Small Purchases
Karatbars gold isn’t just cheaper to buy but can be more practical when you need to sell. Maybe someday you don’t want to sell a full ounce of gold to meet a small financial need. Enter Cashgold. Since it frequently comes in smaller denominations than the 1 gram gold card, you can sell only what you want or need at the time.
Every investor should have some gold around for this very reason.
Keep in mind that gold coins and bars bullion can be sold virtually anywhere in the world