Why gold retains its value in a digital world

In the past, investors in precious metals such as gold, silver, and platinum always paid via bank transfer. Nowadays, this is increasingly done with cryptocurrencies, such as Bitcoin.

Gold and silver are also facing competition from cryptocurrencies, as more and more people are investing in them. This is because, in particular, gold is more stable in value than, for example, Bitcoin, which gives precious metals greater appeal. Precious metals are also physical and tangible, which makes them more attractive as well.

The role of gold as a safe haven in times of economic uncertainty

For centuries, gold has offered protection to many people during times of economic uncertainty. This includes periods of inflation or geopolitical tensions.

Gold is a more stable investment than, for example, investing in digital currencies, as these are often more subject to price fluctuations, especially during times of economic uncertainty. This became especially evident from the rise in gold prices during the economic crisis of 2008 and the corona crisis that began in 2020.

This can be seen in the development of gold prices during these crises. We saw this for the first time during the financial crisis of 2008. Prior to that, gold prices were already rising, resulting in a gold price of $750 per troy ounce in October 2007, rising to $1,000 in March 2008 and remaining roughly the same in the following year.

All of this was confirmed by research from the global umbrella organization of gold traders, the World Gold Council.

During the corona crisis in 2020 and the following years, there was also a significant increase in the gold price. In January 2020, the gold price stood at approximately $1,550 per troy ounce, which rose to a record high of over $2,000 per troy ounce in August 2020. The world was already under the influence of Covid-19 at that time. The price increased by over 29% in just over six months, according to research by the World Gold Council.

These studies and figures show that gold often increases in value during periods of economic uncertainty, making it an attractive option for investors seeking stability.

How gold compares to digital assets such as cryptocurrency

In the past, people who wanted to invest in currency did so in precious metals, such as gold. Today, more and more people invest in cryptocurrency, with Bitcoin being the most well-known. On the other hand, many people still invest in gold because of its proven track record. People have been investing in gold for thousands of years, while cryptocurrencies are relatively new and volatile. That’s why many people place more trust in investing in gold, which keeps this precious metal highly valued.

The cultural and historical significance of gold in the modern economy

Since the time of the Egyptians, gold has been important as a status symbol, after which the Romans began using it as currency. Gold was and still is a symbol of wealth, which is still reflected today in gold jewelry.

Even in today’s times of technological advancement, gold retains cultural and emotional value. Investing in gold remains popular, as does the use of gold for jewelry and, for example, interior design. Central banks and national reserves still hold gold reserves.

Investing in gold in a post-digital economy

There are different ways to invest in gold. This is usually physical gold, such as gold coins and bars. This offers the possibility to effectively diversify risk, more easily than investing in cryptocurrency, for example. When you invest in a combination of gold, silver, and platinum, you spread the risks. That is beneficial when precious metal prices fall.

Would you like to know more about investing in gold? Then contact The Silver Mountain for advice.

Disclaimer: The Silver Mountain does not provide investment advice and this article should not be considered as such. Past performance is no guarantee of future results.