Why should I care about Gold?

Jan 2, 2015 by

So, almost daily we hear about gold prices going up, whether it’s on a commercial or whatever.  People are willing to buy your scrap gold and old gold for decent prices. Gold prices seem to be doing incredibly well, and they continue to close higher and higher every day. But why are people so dependent on gold, and why does it matter to those of us who are investing our money into the market?

 

The Gold Standard

goldinvestingMost economic systems used to have what was called a gold standard, that is, the money in the system was based off of gold, and each bill had a certain amount of gold backing. As time has gone on, this has changed. That hundred dollar bill does NOT have $100 worth of gold backing it. What gives the American dollar its value is the fact that it is the American dollar. It is completely psychological.

So, as the economy went into recession, the confidence that people once had in the American dollar (and actually, most world currencies are the same way with the global economy as a whole was going into a recession) went with it. Thus, the value of a dollar goes down, causing inflation. If there is nothing backing up a currency but your mind, then the inflation value is going to occur a lot more quickly than if there is physical backing to your money.

 

So Why Does Gold Matter?

 

Where does gold come into this? Well, the thing is, gold was the original currency. It will always have some sort of value, because it is a rare and precious metal. As stocks and such change in value every single day, gold maintains it. The stability that possessing gold provides far surpasses the stability of any other currency or metal (except perhaps silver, which has also gained popularity).

Gold value has increased significantly this year, as the economy continues to get better and unemployment continues to decrease significantly. People are still nervous about their investments, however, so they’re investing in something that doesn’t lose value as quickly as world currencies do.

Is it worth it to sell your scrap precious metal for it? I’m not sure. I assume that part of it is overreacting, but it is always good to make sure that your investments are safe and secure, especially when the economy is as unstable as it is at the moment. Talk to professionals, look at your options, and always do research before you invest your money in anything.

 

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