Why Gold?
If you are thinking about investing in gold, you should probably know the reasons to dive into the precious metal. Some people, known as ‘goldbugs,’ think gold is always a good investment. At the very least, you know your net worth in its weight in gold! Seriously though, gold’s value fluctuates wildly over times. It is best to remember when you should expect gold’s price to increase, versus decrease.
Inflation/Currency Devaluation
Gold is the ultimate hedge against inflation and currency devaluation. This is the main appeal of gold. If your country’s currency is goign down in value, then it is a good idea to protect your wealth by buying gold. If you leave your money in cash, inflation/currency devaluation will eat away the real value of that money. If the dollar is falling and inflation is rampant, having dollar savings becomes increasing worth less, whereas gold retains its value.
Uncertain Times
During uncertain times, gold goes up in value. During economic crisises, it is not clear if deflation or inflation is next. In these circumstances, gold becomes more appealing since gold is recognized as a store of value. You don’t have to worry about what will happen next in terms fo currency valuation or other scenarios if you hold gold reserves. Even during the Great Depression, which was a major deflationary phenomenon, gold went up and held its value for quite some time.