The Value of Gold Through Global Economic Crises
For decades, investing in gold has been widely considered as protection against economic crises and inflation. This is because there aren’t many investment options that perform as well as gold does when the economy is unstable.
This isn’t just a prediction on paper but a product of years of research and close inspection of how gold behaves when a crisis hits. Many historical economic crises saw widespread unemployment and a drastic fall in currency value.
This decline in currency saw the value of gold and other precious metal investments soar in the market. There have been several such instances, and almost every time, investors have turned to gold.
We’ll discuss all the reasons why gold gains strength in an economic crisis and talk about the value of gold in a few of the greatest recessions in history.
The Value of Gold
Gold has a wide range of applications in a variety of industries. Its most common uses include creating ornamental goods such as jewelry. One of gold’s unique qualities is malleability, which allows it to be beaten into sheets, pulled into cables, and molded into various shapes.
How to Invest in Gold
There are several ways to invest in gold. People invest in gold bars, bricks, and coins for complete ownership of the precious metal. Gold can also be bought in contracts like stock bonds.
Gold’s Value During Inflation
Gold has an inverse nature in the market compared to currency or stock bonds. Whenever there’s inflation, currency value goes down, taking the value of stock bonds down with it.
This forces investors to invest in other kinds of commodities such as precious metals. Since gold is scarce in quantity, the increase in demand causes a shortage of supply which skyrockets its value in the market.
Gold Value in Historic Crises
The Great Depression
The Great Depression lasted ten years, from 1929 to 1939. The value of gold doesn’t fluctuate too often, but these ten years saw a constant increase in value for this precious commodity. The effects of the World War were noticed as production of goods fell below the 0% mark. As currencies fell into a depression, the value of gold increased about 65% in the market.
The Great Recession
This was a turning point for precious metals as investment tools. The economic crisis lasted eight years, from 2001 to 2009. Gold prices during this era saw a massive increase of about 857 US dollars, taking the value to $973. In 2010, they reached $1000 for the first time.
2018 to 2020
These three years saw multiple world events, including trade tensions between the US and China, increased animosity between Iran and the US, and the COVID-19 pandemic. Gold prices in this era of uncertainty rose almost 400 US dollars in the market.
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