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Gold as a Store of Value

Blog Feb 11, 2010

Gold has been around for over 5,000 years. It has been treasured by individuals, kings and civilizations for its beauty and intrinsic value. It has been used for trade and as a currency for many years throughout history by many different countries. Gold has always been used in jewelry and for artistic purposes. But the main point is, it has always been a store of value and always will be.

Gold’s value comes from its rarity. Anything that is sought after that is rare is valuable. In fact, some estimate the world pours more steel in an hour than it has poured gold since time began. All the gold in the world could be compressed into a 20-yard cube, which is about 1/9th the mass of the Washington Monument.

This financial storm has created a lot of demand for gold, just like many other financial crises have. As demand heats up the values rise. This is a simple rule of economics. However, because gold is of limited supply, its values will rise faster than that of something that can be massed produced. It should be noted that more gold is added to the market every year through mining, but peak gold production has been achieved. A mining company used to be able to extract 12 grams of gold from 1 ton of ore. Now the average is 3 grams per ton of ore.

People always wonder if gold will ever be worthless. It has never been worthless, and I do not believe it ever will be. It is the first true money. It cannot be printed into oblivion and it cannot be destroyed. Thousands of currencies have failed over history, but gold has stood the test of time. It is truly the choice for a store of value.

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