For centuries, people knew that gold was the same thing as money. Within countless civilizations, the money that circulated on a day to day basis was often either gold itself, as gold and silver coins, or a currency backed by gold. Conditions like inflation and excessive debt were unlikely to occur as it is very difficult to manipulate gold. The only time these two things became problematic was whenever the government devalued the national currency with regard to gold. Even so, gold was well-known as a form of money.
The general population's image of gold was altered considerably during the 20th century. For example, the US dollar had been connected to gold since its inception. People understood exactly how many dollars it took in order to swap those dollars for a certain quantity of gold. But soon after the formation of the Federal Reserve, the connection between the dollar and gold began to change. Specifically, the Federal Reserve started to devalue the dollar in terms of gold, which meant that it took more dollars to acquire an equivalent amount of gold. And then the dollar was taken off the gold standard altogether in 1971, fully severing the connection to gold.
After the gold standard was abandoned, the US dollar became what is generally known as a fiat currency, which means that it is just a paper currency and only has value because the government says it does. Many other nations have adopted identical policies, and we now are now living in a world filled with paper currencies, which are all susceptible to inflation and devaluation. For generations, gold has been ignored as a real money form aside from a tiny minority of investors not part of the mainstream.
But now attitudes are changing yet again. Following the recent financial meltdown, this trend has started to reverse and people are starting to understand once again that gold has been used as a form of money for hundreds of years. And people are noticing once more that using gold as a form of money has some fantastic benefits. Firstly, there is no credit risk in gold, and you can be certain that the gold's value won't ever drop all the way to zero. Neither of these things can be said in regards to the main debt instruments and currencies in the world these days. Secondly, gold is bought and sold all over the world and is globally recognized for its value, and thus there is no liquidity risk in gold. Last but not least, gold will invariably fulfill at least a pair of very important human desires: the need for basic safety, along with the appreciation of beautiful objects.
And finally, there is this reason: when awful things occur, and the price of all sorts of assets fall, gold is likely to retain its value. It can guard you against inflation, and it can guard you from a significant crisis. In other words, gold is a great form of protection and insurance for your portfolio. A lot of people are beginning to uncover some of these positive features of gold, so it's no real shock that the price of gold is constantly climbing higher. With all of these benefits, isn't it time you looked at adding gold to your portfolio as well?.
Investing in gold is one of the wisest financial investments you could make, and investing in gold coins is easy. The Krugerrand is the official gold bullion coin of South Africa, and it has become one of the most popular gold bullion coins in the world. Find out more about gold Krugerrands here, and you should also read the Krugerrand FAQ.
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