Gold is a precious metal that has been around for centuries. Before the US dollar became the global currency, gold was the primary form of currency. In fact, many countries still use gold as their official currency today.
Gold is a valuable resource for a number of reasons: it doesn’t corrode, it has a very low reactivity to other elements, it is non-toxic, gold is scarce but not too rare, and it has a relatively low melting point. All of these reasons make it a valuable resource that can be used for jewellery, electronics, and even medicine (gold is antibacterial).
But why should we invest in gold? This blog post will break down 5 key reasons that explain why gold is the best investment option.
These 5 reasons include:
- Gold Stocks are Undervalued
- Gold is Historically Cheap
- Gold Supply Is Limited
- Gold Stocks Are Different To A Bullion
- Gold Is Stable During Inflation
For each reason, we will explain why gold is a wise investment choice and why you should consider buying gold mining stocks.
Gold Stocks are Undervalued
Gold stocks are extremely undervalued, making this an excellent time to invest. Because gold has been on the decline for several years, investors are looking elsewhere to make their money grow and many of them have forgotten about gold stocks.
However, don’t be frightened by dropping prices! This means that gold stocks are a great investment opportunity because when the market rebounds, prices will soar. In other words, you can buy low and sell high! According to kitco.com, we can see that gold is currently on the increase, providing serious investment potential.
Gold is Historically Cheap
Another reason to invest in gold mining stocks is that gold is historically cheap. The price of gold has been steadily dropping for years, but it’s important to remember that gold is still significantly more expensive than it was several decades ago. For example, during 1980-2001, gold was $200 per ounce, now it is sitting at $1,769 per ounce!
Gold Supply is Limited
The supply of gold in the world is limited because it takes so long to mine. The best way to understand this concept is through an example: let’s say that you could dig a hole straight down into the center of the Earth and when you finished, there would be one ounce of gold waiting for you at the bottom.
How long would it take you to dig that hole? About 33 years! And this is just one ounce of gold- the total amount of gold in the world is much more than that. So, while other investments like stocks and bonds can be printed infinitely, the availability of gold is limited which makes it a valuable commodity.
Furthermore, Australia is a hot zone for gold mining right now. However, this won’t last forever! Plenty of gold mining companies are making huge discoveries around Australia. For example Kairos Minerals Ltd (ASX: KAI) recently announced 873,000oz Au gold Resource with outstanding upside for their Pilbara project.
Gold Stocks Are Different to a Bullion
Another reason why gold mining stocks are the best investment is that they’re different from buying bullion. If you want pure exposure to gold, it’s better to purchase an actual ounce of gold and store that in your house rather than buy stock in a company that mines for gold.
However, because gold stocks are so undervalued right now, they provide a more affordable way to invest in precious metals. Plus, when you buy stock in a company, you’re actually investing in that company and its future – something that can’t be said for buying bullion.
Gold is Stable During Inflation
One of the best things about gold is that it’s stable during inflation. While other investments like stocks and bonds can be greatly affected by rising prices, gold remains a valuable commodity no matter how much prices go up. Even during the Great Depression, when stocks plummeted by more than 60%, gold was stable and didn’t drop in value at all!
Especially during these uncertain economic times, you should seriously consider investing in gold as a way to protect your money from inflation or any looming recessions.
Therefore, if you are thinking about parking your money in an investment, gold mining stocks are the best option for you. Not only is there a high demand and limited supply, but prices remain stable when inflation rises and they can provide huge returns in just one year!
Founder Dinis Guarda
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