As currencies rise and fall according to the health of world markets, gold tends to hold its value; in fact, volatile financial markets usually see a corresponding rise in the price of gold. This is why gold is sought after and traded globally, as a safe asset providing protection against uncertainty.
The benefits of gold investment
Gold is about as immune to the vagaries of world financial upheaval as it's possible to get. When recessions hit and interest rates are low, savings accounts will grow slowly or barely at all, yet gold can be relied on to hold and build its value. Even when the trough becomes a peak, gold still maintains a steady price and represents a safe investment.
Why is this? The world has a finite supply of gold, which is challenging to locate and mine. In South Africa's Mponeng mine, miners are now searching for gold veins 2.5 miles below the surface. They may excavate over 5,000 metric tonnes of rock every day, yet only need to find 10 grams of gold per metric tonne for the operation to be profitable. Such is the rarity and value of gold.
Supplies are dwindling, yet demand is still increasing. Gold mines in the main producing countries, which include South Africa, Australia and China, are becoming exhausted. This scarcity means you can be confident that your gold is unlikely to fall in value; if it ever does, it won't be by much or for long.
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