Why Invest in Gold?

 In Articles

It’s time to have an honest conversation about Gold – why it’s valuable, why investors used it to secure wealth over time, and how our current economy values it.

Why it’s Valuable?

All portfolios have the chance to diversify with pillars of investment: real estate, equities, securities, currencies, etc, but it’s not uncommon to hear that you should hold about 5-10% of your investments in gold or forms of gold like the SPDR trust. Without getting into the pricing, valuation, or volatility, let’s simply clarify why gold would be any more valuable than other precious metals. Aside from the jewelry value, which is arguably the most public display of gold wealth, gold was valued for being rare enough to find, but fairly unique and unmistakable when in a purified solid form.

Why Investors Use Gold To Secure Wealth?

Most other gold investments would be held securely in either an investors home or some secure storage service of their choice. As the economy evolved, methods of transactions were being shaped by the faith and desires of the users of the currency. Before gold was promised as an IOU, it would be exchanged directly. At first, people felt okay about using gold because it’s rare and unique qualities, then later used it for efficient transfer of electricity because of it’s atomically unique properties. At one point, gold was so trusted that we even let banks hold our wealth in exchange for paper IOU’s for gold and hold gold for people as a service. This went on for years until 1971 when the world economy changed to a fiat system, where countries are mandated to conduct economic transactions in a particular currency.  Now in the USA, your money is no longer backed by physical gold. Since then, we have developed a credit economy and commodity backed currency.

Economy’s Divorce From Wealth 

In the fiat system, money like the US dollar is worthless without faith of value and trust of the US government – particularly the Federal Reserve, which is actually a privately held institution. The divorce of gold from the fiat system economy and USD currency means that in order to diversify the overall value of your wealth, you should consider holding other things of value. Gold continues to be a strong store of value, but blockchain based cryptocurrencies are quickly gaining popularity. However, there are plenty of other things that carry value as well like diamonds, sapphires, silver, etc. These things make it easy to transport a high value sum with relatively stable prices that could readily be exchanged.

FrostGate’s Relationship with Gold

FrostGate does not have any positions in physical gold or securities that are associated with the value of gold. However, we do suggest that you diversify your portfolio to secure your wealth maybe not with gold, but we can talk with you how to get invest with our other investments to preserve your wealth over time.

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