Gold: Why own it?
Gold has always been considered a valuable element due to its rarity and its aesthetic attributes. The first gold coins were made around 700-650 BC. Gold is mentioned in the bible at least 400 times. A one ounce $20 dollar gold coin back in 1880 could buy you a nice tailored suit. The same ounce of gold can get you about exactly the same thing with the price of gold around $1800 per ounce.
“Gold owes its status as a precious metal to its rarity: all the gold mined throughout history would fit into a square box with sides of around 20m in length. That’s not because of a failure to mine more. Gold is rare throughout the Universe because it’s a relatively hefty atom, consisting of 79 protons and 118 neutrons. That makes it hard to produce, even in the incredible heat and pressure of the ‘chemical forges’ of supernovae…” - Sciencefocus.com, “Why is gold rare?” BBC Science Focus, Robert Matthews, 2023
Gold’s rarity has been fairly consistent throughout history and makes it a natural choice for a medium of exchange as well as silver. You don’t need to worry about its value being manipulated when it is used in its physical form. Because it is hard to get, its value remains intact.
Gold has not necessarily been a high growth investment but thanks to the government’s addiction to spending and printing of money over the last 30-40 years, gold has benefited greatly. The question is…”Will the government ever cut back spending and stop printing money?” I honestly do not see that happening.
“Gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments, such as stocks and bonds, to decline. Although the price of gold can be volatile in the short term, it has always maintained its value over the long term.” - Investopedia.com, 8 Good Reasons To Own Gold, Tony Daltorio, 2021
If the government decided to follow a more conservative spending policy or tied the dollar back to gold then I could understand why gold would just be a store of value. The truth of the matter is that people like free stuff. Our politicians are all too happy to promise the free stuff to get elected. Our money becomes increasingly diluted from printing. Therefore, we will continue seeing gold increase in value because gold can be trusted.