Sunday, February 20, 2011

Gold a highly liquid reserve currency and a hedge against Inflation

Gold a highly liquid reserve currency and a hedge against Inflation

Gold was used as a "reserve currency" and an inflation hedge because it could hold its value over hundreds if not thousands of years ...
Why invest in Gold , because Gold is :
* Is portable and divisible. Its weight easily determine the value of the object;
* Is indestructible;
* Is easily recognizable and acceptable form of payment.

Whether in times of crisis and in times of prosperity, gold endures. The cyclical nature of the market is a historical fact and discharged, but gold is able to maintain its value over time. By contrast, many currencies (including the U.S. dollar) and industrial raw materials have generally lost value. This is because gold is often bought to hedge the risks of inflation and currency fluctuations and also because many investors around the world see gold as a safe haven of last resort, safe and important part of their investment portfolio. The 'gold maintained its value against the U.S. inflation rate over the past 200 years.
In other words, the value of gold - or what you can buy goods or services - has remained fairly stable over time. For example, a man dress in 16th century England at the time of King Henry VIII cost the equivalent of one ounce gold price that you can now also pay for a modern dress.
Safe haven

Gold is known as a safe haven. Throughout history, national currencies have been considerable fluctuations while gold remained fairly stable. Is not directly affected by the economic policies of each country and can not be repudiated or frozen as in the case of some paper assets. For these reasons, one quarter of all gold held by the existing governments, central banks or other official institutions in the form of international monetary reserves. Nothing suggests that the ability of gold to maintain its value will change over time in the future, although for some time, the U.S. dollar as currency and the Swiss Franc have become increasingly attractive stores of value.

High liquidity

Gold is one of the world's economic goods more "liquid". It can be readily sold at 24 24 hours in one or more markets around the world. This can not be said for other types of investments including bonds or shares of major companies and organizations worldwide. In addition the commission on gold sales are comparable to those of stocks and bonds (securities deemed liquid). Finally, the time required to perform is that gold equities or bonds, and virtually identical.

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