Gold has always been a hot commodity with its shiny and beautiful appearance to its body that can be moulded into any design you want. In Asian and Middle Eastern countries especially gold ornaments are a must have during weddings and other happy occasion some even adorn their favourite deities with golden jewellery. Gold has always been a status symbol for the rich and prestigious due to its high cost making it unaffordable to the not so well off.
Gold ignited by the currency wars
Paper money has been in use as currency only recently but way before that gold was a much valued physical asset/ commodity and globally recognized form of currency. Most common used form of gold is in biscuits and you will get it in many weights. Gold is brought on the basis of Gold rates that have always been on a swing once too high, once too low very much like the unpredictable share markets.
Currency wars are the devaluation of currencies of various nations as they have been under debt, due to which the economies are being stimulated by reducing the value of currencies causing modest inflation which is commonly believed to have a positive economic effect. These currency wars have led the price of commodities to rise high and the raw material supply cannot be increased or decreased as effortlessly as paper currency therefore the normal value of the raw materials has to be increased. The constant falling of the currency value has urged people to increase their gold buying as they have lost confidence in the currency.
Gold is money
Gold from a thousand years holds a high place for itself as a much coveted and valued piece of commodity due to its features like divisibility, scarcity, durability, scarcity and malleability. Up until 1971 the world had followed the gold standard by the then US President Richard Nixon under the Bretton Woods monetary system removed the existing peg in between the US dollar and gold, this system allowed only foreign citizens to convert their dollars to gold. But soon the demand for gold as a currency increased with the increased flow of foreign citizen causing the American gold to be depleted at high rate and this was at a time when the supply for dollar was massively expanding.
Since then the world follows a kind of “fiat” system where the currencies are backed only by confidence and their value is allowed to float freely against one another. But this monetary system has been showing cracks thereby indicating that it has reached its last stage as notably China and Russia with many other central banks have become gold’s net buyers creating scarcity in the market thereby increasing its value. With the increasing amount of debt and the printing of massive amount of money that is unable to support the massive amount of debt nations are recognizing that gold has, is and always will be money.
At the Gate of Golden Era
With nations recognizing the value of gold there is a very good chance that gold standards maybe reintroduced or the gold may just back up their currency indicating the end of paper currency. The limited supply of gold and its increasing demands leads us to believe that the price of gold will increase exponentially before a fair price is implemented under a new gold standard.
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