National policy and economic instability that can devalue a country's currency have no direct impact on the value of gold. The underlying worth of gold is most obvious when a national currency becomes unstable. At times like that, the value of what people can buy gold at spot price in relative terms declines with the valuation of their currency and their bank holdings also diminish in real terms. Acquiring gold is a sure fire way of safe guarding yourself from currency instability.
During situations of fiscal instability, savvy investors tend to increase their overall gold holdings to give themselves greater protection against falling currencies and fluctuating stock prices. Governments that enact poor economic policies such as taking on unnecessary debt or overspending on public programs to gain voter favor can see that country's currency plummet. When certain conditions occur, that currency might drop swiftly and as a result, international purchasing power and national savings could be greatly impacted.
The paper money you carry in your pocket essentially has no value other than the one we all agree to give it. If there are substantial political changes or economic uncertainties, then what that paper might actually be worth can vary dramatically. When these situations arise, gold becomes invaluable. Gold becomes more scare and more valuable as the value of paper money diminishes. If trading partners stop accepting the promises of a government, then usually those trades go back to using gold.
What is true today is that gold has maintained a good price because of the disastrous headlines making world news. This has certainly been born out during the recent financial troubles, and everyone knows that when things are looking decidedly uncertain, gold is the place to "store" your money. It will be interesting to see what happens with asset valuations as the world embarks on the long term economic recovery from the decimation that occurred over the past few years. With unheard of levels of national debt weighing down most western countries coupled with extremely high levels of debt, commodity prices might fall in favor of shares in the short term, but longer term, inflation risks must come into play.
It would be fair to say that gold, along with the other precious metals found by ancient man, helped to create art and culture and enlightenment. Gold still holds is mystique even a millennia after early man first laid eyes on it. Gold's significance in many theocracies across many different cultures is highly unique. It is a symbol of wealth and power in virtually every culture that has ever existed. While our modern religious practices don't necessarily value gold as highly, our popular culture's opinion of gold has not decreased.
During situations of fiscal instability, savvy investors tend to increase their overall gold holdings to give themselves greater protection against falling currencies and fluctuating stock prices. Governments that enact poor economic policies such as taking on unnecessary debt or overspending on public programs to gain voter favor can see that country's currency plummet. When certain conditions occur, that currency might drop swiftly and as a result, international purchasing power and national savings could be greatly impacted.
The paper money you carry in your pocket essentially has no value other than the one we all agree to give it. If there are substantial political changes or economic uncertainties, then what that paper might actually be worth can vary dramatically. When these situations arise, gold becomes invaluable. Gold becomes more scare and more valuable as the value of paper money diminishes. If trading partners stop accepting the promises of a government, then usually those trades go back to using gold.
What is true today is that gold has maintained a good price because of the disastrous headlines making world news. This has certainly been born out during the recent financial troubles, and everyone knows that when things are looking decidedly uncertain, gold is the place to "store" your money. It will be interesting to see what happens with asset valuations as the world embarks on the long term economic recovery from the decimation that occurred over the past few years. With unheard of levels of national debt weighing down most western countries coupled with extremely high levels of debt, commodity prices might fall in favor of shares in the short term, but longer term, inflation risks must come into play.
It would be fair to say that gold, along with the other precious metals found by ancient man, helped to create art and culture and enlightenment. Gold still holds is mystique even a millennia after early man first laid eyes on it. Gold's significance in many theocracies across many different cultures is highly unique. It is a symbol of wealth and power in virtually every culture that has ever existed. While our modern religious practices don't necessarily value gold as highly, our popular culture's opinion of gold has not decreased.
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