As we approach a second economic collapse within a decade, the world economy stands fragile than ever. Every high school student can name major recessions in American history, like the Great Depression or the 2008 Financial Crisis, where the stock market crashed significantly.

However, unlike the stock market, gold doesn’t seem to crash. Its price is relatively stable, and many investors consider it to be the safest investment option available. So, why is that the case?

Gold Price Works in Opposition to the Stock Market

Many economists believe that when the stock market crashes, the gold price suddenly rises. Looking at historical data, this theory seems very plausible. The most plausible theory for this behavior is that stock market values grow.

When a country is innovating and building, its stock indexes grow. However, when that stops, people are looking for a safer option for their investments, where gold comes in.

For instance, the biggest bull market for gold was during the 1970s, a decade known for its stagnant economy and equity markets. Similarly, sometime after the 2008 economic fallout, the price of gold also began to rise significantly.

Inflation Rates Determine Gold Price

Although it’s said that there is no way to predict the gold price, many economists believe that inflation plays a significant role. For instance, the USD is weak, which means the world economy would experience more volatility, which would mean more considerable inflation.

Therefore, to determine the future price of gold, economists study the economic and market volatility instead of the country’s monetary policy.

Gold Will Likely Never Lose Its Value

Gold is an item that has endured for almost all of recorded human history. For centuries gold has been used as currency. Until the mid-20th century, many countries had a gold standard that pegged their currency to gold prices.

Although you cannot pay for groceries using gold today, it remains a highly valuable precious metal. It is recognized across borders and can be traded anywhere in the world. Therefore, gold is a fantastic way to diversify your investment portfolio.

Are you looking to open a gold IRA or wondering how to invest in gold? Get in touch with us at Orion Metal Exchange. We’ve been in the precious metal industry for five decades and are one of the best silver and gold IRA companies in the USA.Contact us now to learn more.

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