Investing Basics: Is Gold Actually a Good Investment?

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Gold is one of the longest-running stores of value in human history. A great big stack of gold has been a symbol of wealth since ancient times. Something about the color, the feel, the way gold catches the light; it’s easy to see why people consider gold valuable when you hold a gold coin in your hand.

But is gold actually a good investment in the modern era? If you have an amount of legal tender that you want to invest into a physical commodity, should you consider adding actual gold to your portfolio? Let’s take a look at what makes gold such a unique investment.

What Makes Gold Valuable?

First, let’s look at what makes gold a valuable metal. Unlike many metals, gold doesn’t corrode. It’s an element. This means it can’t be broken down any further without a lot of energy being expended. If you were to crack open a chest that was buried thousands of years ago, the gold coins inside would be essentially unchanged.

This has made gold the preferred physical store of value for passing wealth down over generations. Since you can melt gold over a campfire, the metal’s malleable nature makes it easy to shape into jewelry, currency, trade bars, or even into more functional shapes like circuit board components.

Economies rely on gold when other forms of currency fall out of favor. If the US dollar suddenly collapsed, the odds are good that simple gold coins would still hold value for trading and bartering.

Investing in Gold

As an investment, gold has proven itself time and again. It’s an excellent store of value for your money when you’re concerned about inflation. A gold bar is worth as much as, well, a gold bar. If you bought a gold bar in 1920, it’d still be worth its weight in gold, as a matter of fact. Meanwhile, if you still had the actual currency you used to purchase that gold bar in 1920, you’d have substantially less value due to inflation.

Gold also tends to overperform when people have low confidence in various world governments. It’s something a “crisis currency,” because its value tends to spike when global stability is low. In short, this all combines to make gold a very good long-term investment for anyone looking to shore up their portfolio against potential financial instability. The long-term stability of gold makes it the cornerstone of any well-rounded investment portfolio.