I was wondering why it is better to own gold, (or any precious metal) than the actual money that represents it? If the price of gold goes up, won’t the money that represents it go up too?
Gold is a commodity, or "precious metals". Reasons why people buy it, or prefer to have this over cash, b/c our cash is a currency and depreciates in value over time of its purchasing power, or known as inflation.
Gold, and oil, are good against inflation b/c they don’t depreciate and they don’t lose value. Our U.S. currency loses its value through inflation b/c of economic conditions and government regulations (the Federal Reserve can increase/decrease its money supply and decrease the purchasing power of the dollar.)
The price of gold doesn’t necessarily go up in value b/c of their rarity but mostly benefit from inflation and demand. Gold really is a good inflation-index, more like insurance against tough times.
Money, or in the U.S. dollar, never really goes up in value (deflation). It hasn’t since the 1930s so it is best to buy gold or some other investment than to hold cash indefinitely.
4 Responses to “Why is currently better to own gold, than the money that represents it?”
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I think it WAS better to own gold from the runup from 7-mid 800s. I don’t think it’s a good play where gold is at currently. if we dip back into the 700s maybe? Problem is that if we dip back down, that would mean market is coming back to normal and the dollar would be stronger. Just remember, cash is king in this world, not gold. Hold what you feel comfortable. I’ll hold plain ole US dollars over gold at it’s level now.
Gold is basically a safehaven for all this recession, depression environment. A lot of investors get out of stocks and supposedly rush to hold physical gold as a safehaven.
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Money does not represent gold.
References :
Gold is a commodity, or "precious metals". Reasons why people buy it, or prefer to have this over cash, b/c our cash is a currency and depreciates in value over time of its purchasing power, or known as inflation.
Gold, and oil, are good against inflation b/c they don’t depreciate and they don’t lose value. Our U.S. currency loses its value through inflation b/c of economic conditions and government regulations (the Federal Reserve can increase/decrease its money supply and decrease the purchasing power of the dollar.)
The price of gold doesn’t necessarily go up in value b/c of their rarity but mostly benefit from inflation and demand. Gold really is a good inflation-index, more like insurance against tough times.
Money, or in the U.S. dollar, never really goes up in value (deflation). It hasn’t since the 1930s so it is best to buy gold or some other investment than to hold cash indefinitely.
References :
Brad say’s cash is king, not gold. I almost fell out of my chair laughing.
Money doesn’t represent gold. Gold use to represent money,when we were on the "gold standard"
You have it backwards. Gold,silver any precious metal is a hedge against inflation. A dollar becomes worth less over time. Like the Federal Reserve printing all this new money to bailout everyone. Inflation is going to be on the rise.
Take 5 minutes to watch this video and it will all make sense.
http://www.youtube.com/watch?v=z6NfXk7Bvc8
Don’t feel bad 99% of people work their entire life to earn money and don’t understand how money works. I think this is a big reason we’re in the mess we’re in.
References :
http://bullioncity.com