History would show us that gold has always been a valuable precious metal for use by human beings for jewelry, coinage, and other like purposes. In fact, its importance is such that most monetary policies are based on gold standards. Many symbolisms and ideologies are directly linked with gold. Currently, gold continues to manifest its various practical uses made possible by its inherent characteristics of malleability, ductility, and resistance to corrosion.
Using gold as a means of monetary exchange is commonly practiced in many parts of the world either by issuing and recognizing gold coins as currency or as a value of issued money as represented by a store of gold reserves seen in gold-convertible paper instruments. Many countries have already done away with the practice of fixing currency exchange rates to gold and replaced it with the fiat currency.
In spite of views of many economists that gold reserves do not serve as an effective hedge against inflation, individuals and institutions hold on to gold as an investment usually in the form of bullions, coins or bars. The carat designation of pure gold is 24K but it is typically hardened by an alloy for practical daily monetary use. With the continued decline in the output in gold mining, it is clear that the world’s economies are way far ahead of gold production.
Gold prices have recently experienced a resurge which once again brought attention to its possibilities as an investment. It is of note that the largest holders of gold reserves are governments, investment funds, and central banks. Leading the pack is the United States and not very far behind are Germany, the International Monetary Fund, Italy, France, SPDR Gold Shares ETF, China, Switzerland, Japan, and the Netherlands. Apparently, the modern world has not totally abandoned gold as an investment and a possible safeguard in the middle of the present economic turmoil. Industry experts believe that gold as well as silver will have significant price increases in the very near future, encouraging everyone to purchase and hold on to their gold just a while longer.
Originally posted on October 24, 2011 @ 12:41 am