Gold: currency or something more?
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Gold: currency or something more?
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Gold has been the basis of power and wealth for centuries. Has it become the new currency of the free market?

Gold vs World Currencies

Gold rates depend on the currencies’ quotations, in particular the dollar, the euro and the Japanese yen. Against the backdrop of uncertainty about "paper" tools, investors often resort to gold in an effort to save capital and make money at ever-growing gold prices.

In the long term, the yellow metal is advancing against the drop of major world currencies, but this pattern does not always work at short distances.

Forms of gold existing in the market:

  • physical gold bars

  • investment coins

  • futures

  • ETFs

  • contracts for difference

  • unallocated metal accounts

Most of them do not imply personal gold storage being an investment of funds in the metal. This has its advantages, but the presence of a gold reserves within arm reach and at your total disposal is comforting many.

Is gold’s performance that of a currency?

What a controversial issue! By its nature, gold is definitely not a monetary unit issued by some national bank, it is rather a commodity. The convertibility issues is also curious: in any country of the world gold can be exchanged for local currency at a favorable rate, which cannot be said about all currencies, especially not the most common and popular ones. But at the same time, it is impossible to pay directly with a gold bar for a certain product or service without a primary conversion into a local monetary equivalent, while this ability is the main criterion for the currency concept.

Thus, considering gold a currency is not entirely correct, since it cannot perform the major function of paper money. However, by its characteristics, it can easily beat almost any currency, and as a safe asset it will rule the investment market for many years to come.

 

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Published: 20.09.2017
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