Does gold ever lose value?

The value of gold rises and falls like any other investment. While gold will almost certainly never gain or lose its relative value as quickly as penny stocks and dot-com initial public offerings, movements in the price of gold can still convey information. Since gold is an alternative commodity, it helps diversify your investment portfolio and, in doing so, provides a solid hedge against inflation. Gold interest rates tend to remain unchanged by inflation because they retain their value longer than other investments backed by dollars.

For me, the most convincing argument against investing in gold is found in the historical record. Goldbugs like to praise them because they are a “hedge against inflation”. Gold tends to hold its value as prices rise. That's true, but in the long run, that's all it does.

In the long run, you can never lose everything if you invest in precious metals. No matter what any market does, gold and silver will always have intrinsic value. There is a limited supply of these precious metals. Fruit has been harvested more easily, making miners devote more time and energy to extracting lower quality ore.

In fact, we may have reached its peak for gold and silver with the recent annual declines in production. You can, for example, invest in physical gold by purchasing the above-mentioned gold coins or ingots, as well as gold jewelry. While this value may change, one of the main reasons investors seek gold is because physical gold is easy to liquidate. A recession would favor gold prices, but the sharp rise in interest rates used to deal with inflation has so far limited the rise of the precious metal.

Under the gold standard, you can ask a bank to convert your paper money into gold at the legal rate (whatever). The gold market narrative has been driven by the contrasting effects of persistently high inflation and rising interest rates by central banks in response. The outlook for the price of gold will probably depend on how geopolitical tensions develop and how monetary tightening affects the world economy, among other factors. Today, let's discuss the pros and cons of investing in gold using my own opinion as a starting point.

Ironically, despite the inflationary basis of a paper money system, well-preserved paper money from the early 19th century is often worth its nominal value in the collector market, far surpassing gold bars as a long-term investment. I have 0% of my investment dollars in gold and silver, and I hope that will be the case in the near future. However, whether gold is the right investment for you depends on your risk tolerance, market outlook, and whether you expect it to rebound or continue to fall, among other factors. If we're in some kind of post-crisis world where dinosaurs roam the earth, I doubt I want your gold.