Investments in Gold – Chapter 15: Conclusion

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Updated: Mar 5, 2019, 13:14 GMT+00:00

This is chapter number 15 out of 15. Read the rest: Read Investments in Gold – Chapter 1: Introduction Read Investments in Gold – Chapter 2: Advantages of

Investments in Gold – Chapter 15: Conclusion

This is chapter number 15 out of 15. Read the rest:

To many, gold represents many things. It has played many roles in the lives of people as well as nations. It had brought riches and fame to some and at the same time, the lust for it has been the demise of many as well. Nations have also gone to war because of this metal. However, one of the most notable roles for which gold is remembered for is its role as a monetary standard in the economies of the 19^th and 20^th century. That role today has been overtaken by the US dollar. Consequently, with current industrial demand at 10% of aggregate demand when gold was a monetary standard, gold does not seem to be an attractive investment option.

Unless the governments of the world can decide what to do with the stockpile of gold accumulated over the centuries, gold prices will have difficulty surpassing the peak of US$850 per troy ounce attained in 1980. Experts have estimated that if the current stockpile of gold were to be released into the open market, gold will likely trade around US$68 per troy ounce.

Given this scenario, it is understandable that investors will be at a loss at how to regard gold in terms of an investment vehicle. The best approach that an investor can take with respect to gold is to regard it as just a commodity like any other commodity when it comes to investing. As a form of safeguard against a global financial crisis, gold is a good insurance. However one should bear in mind that if such a scenario were to really occur, such form of insurance will only exist for those who hold gold physically. Hundred of millions of dollars worth of gold were kept below in the vaults the World Trade Center. When the twin towers collapsed, those vaults became inaccessible. Still gold is useful in protecting investors from hyperinflation. While hyperinflation may erode the value of other commodities, gold can withstand the negative effects of such a scenario. Nevertheless at the end of the day, you still need to examine your investment objectives before you can embrace gold as the ideal form of investment or write it off as an unsuitable investment vehicle.

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Intro