1. Sustained Demand: Demand for physical gold is rising among private investors, hedge funds, central banks and governments.
2. Scarcity: According to Goldman Sachs, there is only about 20 years of mineable gold reserves left underground.
3. Privacy: Your gold purchase information is not shared with any private or public entity. What you do with your gold is your business alone.
4. Diversification: Gold prices fluctuate in patterns that often run counter to other markets, making gold an ideal choice when seeking additional diversification.
5. Hedge Against Inflation: Precious metals can help preserve your purchasing power over time, especially during periods of high inflation.
6. ETFs vs Physical Gold: Some experts believe that the financial system could break down and cripple firms running ETFs, so they favor buying gold bullion either in coins or small bars for keeping in a safe deposit box.
The World Gold Council estimates that all the gold ever mined amounts to 174,100 metric tons. If this supply were divided equally among the world’s population, it would work out to less than one ounce a person.
A leading investment expert has a good way to illustrate how little gold there is. He has calculated that if all the gold in the world were made into a cube, its edge would be only 69 feet long. So the cube would fit comfortably within a baseball infield.
Much of the world’s gold, however, is out of the hands of private investors. About half of it is in the form of jewelry, and an additional 20 percent is held by central banks.
Central banks buy and hold gold for a variety of purposes, most notably as a way of diversifying their country’s own currency risk. Since 2008, these purchases have been substantial.
Since the supply of physical gold is remarkably small overall, this sustained heavy buying bodes well for the future direction of the gold price.
While the United States has the largest holdings of gold,
it is not the only country where gold is seen as desirable
by individual investors and central banks alike.
Gold bars and coins have always been “tucked away” by wise families as a means of safeguarding wealth in times of societal or financial upheaval. History shows that these catastrophic periods are rarely predictable, but they always come eventually.
Though most people trust the banking system with a majority of their assets, many see physical gold as a way of have a bit of extra protection in the event catastrophe strikes.
