Tag Archives: Gold

Brief Introduction to Investing in Gold

Ah gold, the metal we humans have been fascinated with since the 5th millennium BC, when the metallurgy era had begun. From a scientific standpoint, this precious metal is an element just like hundreds of other naturally occurring substances. However, from the lens of history, gold has been a symbol of prosperity and wealth and it is still considered a valuable asset today, which is traded daily on the gold market. As of the writing of this article, the price of one ounce of gold is $1,317.00 and there is no doubt that this alloy will remain a precious one for centuries to come.

A Bit of Gold History

One historic example of the interest in gold unfolded was with the Thracians, an Indo-European tribe that inhabited a large part of Europe and began preserving this metal as a commodity.   

Egyptians were the first ones who started refining gold ores and used its bars in trade exchanges. In 600 BC, the Lydia Kingdom introduced gold mints as a currency. From then on, gold became a leading option to store value, worth and to make investments.

And to this day, gold is still considered a viable investment option. In this article, we will discuss the reasons why the value of gold as an investment and money has transcended many eras and civilizations.

The Status of Gold as the Oldest Currency

As mentioned earlier, no currency from modern times can predate the status of gold as money. It has been used for over 2,500 years. The second oldest currency in the world is Pound Sterling that was introduced 1,300 years after gold had established its place as a currency.

Gold is not just the oldest currency. It is also a commodity that preserves its value. From the beginning of the 20th century, all major currencies of the world depreciate in comparison to the value of precious metals.

Yes, the price of gold fluctuates like any other commodity. However, its value remains constant over a long period of time.  Waves of inflation affect the purchasing power of traditional currencies, but gold remains unaffected to such economic woes.

The Tangible Nature of Gold

Investments can either be tangible or intangible, and gold belongs to the former group. In today’s world, most of our investments are intangible. Whether it’s stocks or cryptocurrency, everything exists in an intangible form or in a cloud and thus has a volatile nature. As soon as a company declares bankruptcy, its stocks vanish into thin air.  On the other hand, the majority of tangible assets are subjected to physical depreciation. A stash of corn won’t be same after, say, six months. Similarly, conserved oil depletes when it is not properly covered.

In comparison, gold is a tangible asset that can withstand all natural wear and tear. Whether its heat or water, nothing can physically wear out a gold specimen.  Moreover, it can’t be hacked or tempered like digital assets. This is the reason why even after all technological progressions, many people still opt for gold bars and bullions as the viable choice of investment.

No High Financial Risks are Attached with Gold

Gold price graph in USD

Any investment comes with a long list of terms and conditions that also entail different risks and liabilities associated with the given plan. Then, there are intermediaries like brokers and liaisons who are also involved throughout the process and also share the profit.

By investing in gold, one can leave out all these obstacles. It is an investment in itself and requires no terms and conditions. Its value is real and hence never falls to naught. If you have gold assets, you can use it to balance the fluctuations of stocks when the market gets volatile. Rest assured as they will hold their value and can increase in value, depending on market conditions.

There is Always a Gold Rush

The quality and viability of any investment can be gauged through its liquidation value. Every tangible or intangible commodity has a liquidity value, and gold is no different. However, there is no comparison to the liquidity power of gold. If you want to liquidate gold in any part of the world, you can find many keen buyers at any given time. Such a quick transaction is not possible with any other investment plan, no matter how lucrative and sought-after it is.

Easy Storage and Upkeep

The question of storage and upkeep arises naturally with the majority of tangible investments.  For example, crop investments will need a warehouse and active surveillance. Similarly, investing in a real estate property also entail large recurrent maintenance expenses.

Gold is also a tangible asset and a precious one. So, you will have to take care of its safe storage, which can be easily arranged through safe deposit boxes or other secure facility or through the use of precious metals companies that will hold your gold for you in certificate form. Regarding the maintenance of gold, you don’t have to do a thing since it can self-preserve its shape and quality for thousands of years.

No Specialized Knowledge is Required for Gold Investing  

Every investment, no matter how simple and uncomplicated it is, requires some prior knowledge of how it works. Investing in stock options, for instance, entail some good knowledge of how stock markets operate and how one can forecast bullish and bearish trends. Likewise, real estate investments require a hectic comparative analysis of different zones and sectors.

Although it is recommended to research the history and performance of this commodity, you don’t need to be an expert in precious metals to understand its market trends. All it takes is a little homework and money (of course)  to buy gold bullion. Once you have a good understanding of this metal’s value, you can speak to an expert who will guide you from there, and there are thousands to choose form. Just Google ‘Buy Gold’ or an equivalent search term for purchasing this commodity and scores of reputable precious metals websites will show up. With the availability of so many universally certified and accredited gold dealers, you don’t have to worry about the authenticity of any given specimen.

Gold is an Active Investment

Many people think of gold investing as a defensive strategy to protect their fortune. There is no doubt that it is one of the safest forms to preserve your assets. Gold appreciates like other viable investment options. At any given point in history, gold prices were higher than the preceding time. Gold experienced an incredible 721% rise in its price in between 1976 and 1980. Yes, gold is not just a defensive financial measure. It can also turn into a lucrative investment in the long run.

Apart from enthralling with its aesthetics in ornamental items, this yellowish metallic mineral has always provided us with an assurance on the monetary front too. And it will continue to maintain its status as an everlasting investment for a long time to come.

Gold Currency: How History is Backed by Modern Day Rationale

Gold Bars Stacked Up in a PyramidGeologists suggest that gold has always been a most sought-after element to be mined, as compared to other metals and minerals. This clearly indicates that the preciousness of this mineral was recognized since the beginning of human existence, which eventually resulted in gold becoming a premium currency.

In this article we will follow the historical track of gold being used as a currency. We will also provide you with a modern rationale as to why gold has become the most suitable element to back paper currency.

Historical traces of gold being used as currency

In 300 BC, the ancient Egyptians began using gold as a commonity. Before that, trading goods, such as food and clothing was the preferred method of exchange.

In 50 BC, ancient Romans issued the first gold coin, which used the element as currency, replacing the barter system. After that, gold was used by different kingdoms and civilizations around the world. In 1284 AD, gold currency was issued in different major European countries.

In 1792 AD, the United States adopted the silver-gold standard monetary system. This system established the value of the dollar with respect to the amount of gold and silver available.

Four chemical qualifications for an element to become suitable as currency

There are four chemical characteristics that should be possessed by an element to stand as an option for currency. It will be interesting to see how gold has constantly been favored as currency, because it meets all of those four chemical qualities, while others fail to do so.

Element should have definite shape

Many elements naturally occur in gaseous and liquid state of matter. Their indefinite shape and volume make them unfeasible to be exchanged as currency, which means that plenty of elements become unfit for the purpose due to their criteria alone.

Element should not be reactive and corrosive

Many elemental metals are knocked out due to this criterion. Most of them are reactive as well as prone to corrosion. For instance, lithium ignites when it is exposed to the external environment. Iron and copper are subject to severe corrosion. There are 38 elements that become ineligible to be used as currency due to these characteristics.

Gold, on the other hand, doesn’t corrode and it is way less reactive to other elements or nature.

Element can’t be radioactive

To be used as currency, elements possessing radioactive characteristics can’t be selected. There are two major reasons for this.

  • Radioactive elements radiate away, which means they lose their mass with time. They can’t be retained in their actual form if placed openly.
  • Radiations emitted by these elements are harmful for human life.

There is no way that something that depreciates so fast, or something that can harm people can ever be used as currency, irrespective of their value. Plutonium, for instance, is very expensive but equally dangerous. Two rows of periodic table get out of the currency race because they are radioactive.

Elements should be rare

We are left with nearly 30 elements that pass the above three measures. These 30 elements are stable enough to represent money. However, almost all of them except three fail to meet the fourth qualification of being rare. It is important for an element to be rare so that it can be valued as currency, otherwise everyone would have it and valuing currency would become impossible.

So which three elements are left in the end? Silver, platinum and gold!

  • Silver has been used as currency but it couldn’t sustain its position for long because it tarnishes easily
  • Platinum on the other hand has melting point of 3000 degree Fahrenheit. It can’t be melted in traditional furnaces which were used by ancient civilizations to make coins.

As you can see, we are eventually left with only one element which is the most suitable among all the 115 known elements.

Apart from these chemical properties, there are some other characteristics of gold which made it popular throughout history as currency.

  • It can easily be tested for its purity anywhere in the world without much hassle.
  • The production of gold throughout history has remained stable. This means gold has succeeded in remaining available while maintaining its status of being rare.
  • Unlike other valuable items like oil and diamonds, gold only comes in one grade which makes it convenient to use as currency.
  • Gold doesn’t have industrial and commercial uses like other metals and minerals which makes it suitable to be used as currency.

Graph of gold on the rise
Expect gold to rise during unexpected world events

Gold is a primary commodity in the trade market. The prices fluctuate a few dollars each day, but basically remains stable. In the event of a world incident, such as a war, gold may skyrocket to new heights or the opposite may occur, should the dollar gain substantial new strength, but when instability occurs, you can count on the mineral gold to strengthen in price. Many people buy gold as a buffer, should a world event occur that may threaten the global economy.

How to Identify Fake Gold Nuggets

Interested in investing in Gold? Be careful! It isn’t always easy to tell a gold nugget from a copper nugget that has been polished to shine just like real ones. And then there is Fool’s Gold; this is simply the name given to some naturally occurring minerals such as chalcopyrite, bismutite and iron pyrite that look a lot like unpolished gold to the unsuspecting eye.

But there are some ways of testing the nugget and find out if it really is what the seller says it is i.e. gold! And in case you still can’t figure it out, it is always a good idea to consult with a mineral and precious metals expert to help you make the right decision.

As a connoisseur of the finer things in life, Howard Fensterman has a passion for minerals and metals.

According to the professional lawyer and gemstone authority, Howard Fensterman offers the following few ways of ensuring the authenticity of your gold nuggets.

Real Gold Is Heavy

Gold has a specific gravity of 19.3 g; this simply means that it is 19.3 times heavier than a corresponding volume of water. A nugget made of any other metal will feel a lot lighter than a real gold nugget. So if you have ever handled gold, let your intuition guide you on this one. Or better yet, get a weighing scale!

It Always Looks Amazing

Hold the gold nugget under a lamp. Look at it from various angles, turn it around and examine it properly. The color and lustrous shine of a gold nugget remains uniform, but Fool’s Gold will show variations and get caught out! The uniformity in appearance is the secret to figuring out if you have a real gold nugget or not.

Gold is Tough

Try hammering a nail into the gold nugget. Don’t worry; if it really is gold, you don’t run the risk of damaging it.  Because if it cracks or crumbles away, it’s not gold.

Real gold can’t be broken away that easily, it may best or dent slightly but it sure won’t crumble under a hammer.

Do the Nitric Acid Test

This is the most effective, foolproof test we have to date. Drip just one drop of nitric acid (be careful) on the nugget. If it fizzes into green foam, it isn’t gold but copper instead. On the other hand, if the nugget is entirely unaffected by the nitric acid, the Gold Nugget is good.

The Last Word

As the value of gold continues to increase, so does the temptation for scoring a good deal on gold nuggets. Remember, if it sounds too good to be true, it probably is!

If you’d like to obtain more specific information about the qualities of gold, check out Howard’s article the history and scientific background of this amazing mineral.