Why Is Gold Important? A Brief Guide
For over 200 years, gold has been the most important precious metal in the world. It was once the linchpin of the international monetary system, and in a way still anchors the workings of the world’s central banks. Even though it no longer features as prominently as a currency, it nonetheless retains its importance.
Gold has a number of attributes that make it both an ideal monetary metal and an ideal investment asset. It is durable, portable, divisible, uniform, in limited supply, and accepted and recognized as valuable all around the world. And given gold’s importance to investors and industry, it’s hard to imagine a world in which gold didn’t exist.
If you want to learn more about the importance of gold, read on to find out why gold is important. Gold isn’t just for coins and jewelry, it’s a vital precious metal that every person on the planet uses in daily life.
The History of Gold
Gold has served as a monetary metal for millennia, but it really rose to prominence in the early 19th century. When Great Britain formally adopted the gold standard, the many advantages of gold in international trade became readily apparent. By the end of the 19th century, just about every country in the world had adopted some form of gold standard. They understood why gold is important and sought to anchor their monetary systems with the stability that only gold could offer.
While the classical gold standard was done away with during World War I, gold continued to play an important role in international finance. The relationship between gold and the dollar remained even after World War II, and the final link between the dollar and gold wasn’t broken until President Nixon closed the gold window in 1971.
Gold-haters who failed to understand why gold is important thought that gold would fall by the wayside after the gold window was closed, but the exact opposite occurred. Since 1971, gold’s value has increased by leaps and bounds, and its gains in value have even surpassed those of stock markets.
The gold price is now determined not by government fiat but by market forces. And because gold’s qualities make it highly desirable for both industrial and investment purposes, gold is in even greater demand than ever. There’s no better way to demonstrate why gold is important than by thinking about what would happen if gold disappeared.
What Would Happen If Gold Disappeared?
It’s hard to imagine a world without gold. It has been part and parcel of the human psyche for thousands of years. Poets have praised it, bankers have lusted after it, and kings have fought wars over it. Just how different would our world be without gold?
1. Industries Would Falter
Just the sheer beauty of gold jewelry would be the first thing most people would notice missing, as brass and bronze just aren’t able to match gold’s luster. Imagine a world in which silver, platinum, and palladium were the primary metals used in jewelry, and in which silver tones dominated everything. That would get boring pretty quickly.
In many countries around the world, particularly in India and China, gold jewelry forms a major portion of people’s wealth. Gold jewelry is used to make offerings at temples, make gifts to newlyweds, and serve as a store of wealth that will last for ages. Those cultures understand why gold is important, why it serves as an ultimate store of wealth, and why no other metal can match it. It’s hard to imagine how much different many cultures’ ideas about wealth would be if gold were to disappear.
2. Minor But Significant Changes to Our Way of Life
But gold isn’t just about jewelry. The importance of gold to the electronics industry is often underappreciated. If you’re reading this article right now, the device you’re using has gold in it. From the electrical connections in phone batteries to the pins on CPUs to the connectors of your Ethernet and video cables, gold plays a vital role in building electronics. In fact, recycling of old electronics is one of the primary sources of recycled gold in the world today.
Are there metals that offer higher electrical connectivity than gold? Yes, but they don’t offer gold’s corrosion resistance. Are there metals that offer similar corrosion resistance to gold? Yes, but they don’t offer as much electrical conductivity. Without gold, computer hardware engineers would have to go back to the drawing board to redesign their products.
Gold also plays a role in the medical and dental fields. Gold has been used in dental work since at least 700 BC, and has been used to fill teeth for at least 1000 years. Radioactive isotopes of gold are used to treat or diagnose certain medical conditions. And of course, many surgical instruments and electronic devices used in medical care rely on gold plating. Without gold, medical professionals would likewise have to scramble to find alternatives.
3. Decreased Investment Opportunities
Finally, the importance of gold as an investment asset would disappear if gold didn’t exist. No other asset offers the stability that gold does. Over the centuries gold has served to protect the investment assets of thousands upon thousands of ordinary investors. Those investors understood why gold is important and how gold protects assets against inflation and currency devaluation. Gold continues to play that role today, and investors today have more gold products to choose from than ever before.
Whether investing in gold coins, gold bars, gold ETFs, or gold IRAs, investors have a plethora of options from which to choose. For those investors who understand the importance of gold, gold offers them a chance to keep their assets safe and protected from financial turmoil and economic crisis. And with a gold IRA rollover, investors can even roll over existing retirement savings into gold, allowing them to move assets seamlessly from 401(k) accounts into a gold IRA.
It isn’t just individual investors who would be disadvantaged if gold were to disappear either. Governments and central banks, too, rely on gold to underpin their balance sheets. They understand exactly why gold is important. When fiat paper currencies become hopelessly devalued, gold will become the basis for rebuilding the world monetary system.
The US government is the world’s largest gold holder, with over 8,000 tonnes of gold. Even though gold no longer dominates the world financial system, those gold holdings nonetheless give the US a great deal of influence. If gold were to disappear, what would replace that gold as the monetary metal of last resort? Silver, platinum, and palladium all have their benefits, but none of them can hold a candle to the stability and protective abilities of gold.
How to Add More Gold to Your Life
If you want to learn more about gold and how investing in gold can benefit you in retirement, contact the experts at Goldco today. Goldco’s experts can help educate you about the numerous possibilities that exist to invest in gold and point you in the direction of resources that can help you understand the importance of gold to a well-diversified investment portfolio.
If you’re looking to safeguard your investment assets, gold is the way to go. Let Goldco help guide you through the gold investment process so that you can enjoy a lifetime of benefits from your gold investments.