An old desire
Gold has been a valuable asset for centuries, and it continues to be a popular investment today.
With its lustrous brilliance and enduring value, gold has captivated the human imagination for millennia. Throughout history, civilizations and individuals have been obsessed with this precious metal, as it represents not only wealth and power but also holds a unique place in culture, religion, and art. The allure of gold has transcended time and borders, leaving an indelible mark on the tapestry of human history.
But what's the point of investing on something that looks so old-fashioned when there may be more useful and new resources out there? In this article we discover it, but for that we may need to analyze the history.
The obsession with gold has a long and storied history. From the ancient Egyptians to the Spanish conquistadors, gold has been a prized commodity that has driven people to great lengths to obtain it.
A historical obsession
The earliest civilizations, such as the Egyptians, Sumerians, and Indus Valley people, recognized the intrinsic value of gold. They used it to create intricate jewelry, ceremonial objects, and even early forms of currency. Gold's scarcity and durability made it the perfect symbol of wealth and status, and its beauty led to its association with the divine and the eternal.
In ancient Egypt, gold was considered to be the flesh and bones of the gods. It was used to make jewelry, religious objects, and even the sarcophagi of the pharaohs. The Egyptians believed that gold would protect the deceased in the afterlife.
The ancient Romans were also obsessed with gold. They used it to mint coins, make jewelry, and decorate their temples and palaces. Gold was so valuable that it was often used as a form of payment for taxes and other debts.
In the 16th century, the Spanish conquistadors conquered the Aztec and Inca empires in search of gold. They believed that these empires were sitting on vast treasures of gold, and they were not disappointed.
The gold that the Spanish looted from the Americas helped to make Spain the richest country in the world in the 16th century.
The Spanish obsession with gold had a significant impact on the development of Spain. It also helped to fund the construction of many of Spain's most famous landmarks, such as the Alhambra palace in Granada and the El Escorial palace in Madrid.
However, the Spanish obsession with gold also had a negative impact on Spain. The Spanish became so dependent on gold that they neglected other aspects of their economy. This led to economic stagnation and decline in the 17th century.
The obsession with gold has continued into modern times. In the 19th century, the California Gold Rush attracted thousands of prospectors to the American West in search of their fortune.
People from all walks of life, driven by the dream of striking it rich, flocked to these gold-rich areas in search of fortune. The allure of instant wealth was so strong that entire towns sprung up practically overnight. This pursuit of gold not only shaped the landscape of these regions but also impacted social and economic dynamics, leaving a lasting legacy.
In the 20th century, the discovery of gold in South Africa and Australia led to a new wave of gold fever.
Australia's gold obsession is rooted in the 1850s, when gold was discovered in the state of Victoria. The Victorian Gold Rush, much like its Californian counterpart, led to a massive influx of people hoping to strike it rich. Melbourne, the capital of Victoria, boomed as a result of the gold rush, becoming a bustling hub of commerce and culture.
Today, gold is still considered to be a valuable commodity. It is used to make jewelry, coins, and electronics. Gold is also a popular investment, and it is often seen as a hedge against inflation.
The story of gold in South Africa is intrinsically linked to the Witwatersrand Basin, a geological formation rich in gold deposits. This discovery in the late 19th century sparked one of the most significant gold rushes in history. Thousands of prospectors from around the world descended upon the area, seeking their fortunes in the gold fields.
The obsession with gold is a complex phenomenon. It is driven by a desire for wealth, power, and immortality. Gold is seen as a symbol of all that is good and desirable. It is also a rare and precious metal that is difficult to obtain. This makes it even more desirable, and it drives people to take risks in order to get their hands on it.
The obsession with gold has had a significant impact on history. It has led to wars, conquests, and the exploitation of people and resources. It has also fueled technological innovation and economic growth. The obsession with gold is a powerful force that continues to shape the world today.
The obsession with gold is a complex phenomenon that has had a significant impact on history. It is a reminder of the power of greed and the human desire for wealth and power.
Adding it to our portfolio
Nowadays, gold is still included in investor's portfolios and there are reason is included there:
3. As a hedge against inflation
Gold has a long history of holding its value, even during times of rising inflation. This is because gold is not subject to government control, and its supply is limited. When the value of fiat currencies like the dollar or euro declines due to the policies of central banks (e.g. Quantitative Easing), gold can often appreciate in value.
Inflation is a major concern for many investors today. Different central Banks have raised the interest rates in 2022 and 2023 . However, some experts believe that inflation could continue to be a problem in the coming years. If inflation does rise, gold could be a good way to protect your wealth.
2. As a diversification tool
Gold is not correlated with other asset classes like stocks or bonds, which means that it can help to reduce the overall risk of a portfolio. This is especially important during times of market volatility.
The stock market and the bond market can be volatile, and their prices can fluctuate wildly. Gold, on the other hand, is relatively stable. This makes gold a good investment to add to a portfolio has riskier assets such as stocks, bonds, mutual funds or crypto.
3. As a store of value
Gold is a tangible asset that can be easily stored and transported. This makes it a good option for investors who want to protect their wealth from political or economic instability.
In the event of a financial crisis, gold could be a valuable asset to have. It can be used to purchase goods and services, or it can be used to barter. Gold is also a good investment for people who live in countries with unstable governments.
Of course, there are also some risks associated with investing in gold. The price of gold can be volatile, and it is important to do your research before you invest. However, for investors who are looking for a safe and diversified way to grow their wealth, gold can be a wise investment.
Here are some additional things to consider when investing in gold:
a) The form of gold you invest in
You can invest in gold in a variety of forms, including physical gold, gold ETFs, and gold mining stocks. Each form has its own advantages and disadvantages, so it is important to choose the form that is right for you.
b) The amount of gold you invest in
The amount of gold you invest in will depend on your individual financial goals and risk tolerance. It is important to start with a small investment and gradually increase your exposure to gold over time.
c) The time horizon for your investment
Gold is a long-term investment. It is not a good idea to buy gold if you need the money in the short term.
As said when we mentioned the correlation, you should not expect to have huge returns when investing in gold and you should just allocate some part of your portfolio on this or other precious metals. It's mor seen as something defensive.
Although some people have been criticizing gold for some years and praising assets such as Bitcoin or other commodities as the new gold and past performance is no guarantee of future returns, nothing indicates that gold will cease to be useful in the not-too-distant future.