Why Gold Is a Store of Wealth?

Gold has always fascinated people from time immemorial, and it has been used in a myriad of ways. Over the last century or so, gold has come to be regarded as a store of wealth and value, and most investors have gold as a part of their portfolio.

Why is gold considered valuable?

Well, other metals are also considered valuable, but gold has an extra sheen to it. One of the reasons is that gold is hard to find. Even with the latest modern technologies, it is estimated that there is only 160,000 tons in the world. To give you an idea of what this is, imagine if you can convert it all into a single cube. This cube won't even cover a tennis court, as it'll be two meters short! This is how much gold there is in the world. This may increase in the future, but it will not add much as the rate of extraction increases only by a mere 11cms every year. This scarcity is one of the factors that has made gold a valuable commodity.

Another factor that increases its attractiveness is the fact that it can be made into jewelry by mixing it with small quantities of other materials. Pure gold, also known as 24 karat gold, is too soft to be made into any jewelry, and this is why it is mixed with small amounts of copper to make it strong and malleable. Out of the 160,000 tons of gold, more than 95 percent is used for making jewelry or for storing it as bullions. In terms of jewelry consumption, India leads the world as it consumes more than 25 percent of the total gold mined. The remaining five percent finds its way in small applications such as tooth fillings and in electronics.

In the Western world though, gold is stored mostly in the form of bullions as people consider it merely as a form of investment. Gold is the best investment if an economy is tanking and inflation is on the rise. In fact, the price of gold has increased rapidly since the Great Financial Recession of 2008 because inflation has been on the rise, stock markets are volatile and the housing market has just recovered from a massive crash. During this time, many people turned to gold to preserve their hard-earned money and this caused the price of gold to go up.

As the world economy stabilizes, people are now looking to post gold to reap returns out of their investment. The price of gold is the highest in the last 30 years and many people want to cash in on this trend. However, there are many more who continue to believe that the price of gold will increase in the coming years as the demand for it in increases. These factors of supply and demand will eventually drive the price of gold, but for now, it's a great time to sell your gold if you want to make some extra cash from it.

I am a writer, blogger and traveller. I consult for small businesses on social media and content marketing.