For as long as humans have existed, gold has played a significant role in their economic and cultural lives. Gold has long been associated with power, wealth, and freedom, from the time of the Pharaohs to the present day’s monarchs. If you’ve never heard of this yellow precious metal, reading this information is a great place to begin.
So, why do I refer to gold as a form of insurance in the event of an emergency? We’ll start with a question before we get into the meat of the discussion: Have you ever owned an insurance policy? If you haven’t heard of insurance before, at the very least you should know what it is. As an alternative, consider the following definition from Investopedia: “A contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. To protect against financial losses, insurance policies are used.” The insurance jargon has been explained. I’ll give you my layman’s term breakdown here: insurance is simply a promise to protect something in the event that it suffers some kind of loss; Please read my article “4 Pillars Of Protection: Products to Consider in Your Insurance Portfolio” if you’d like to learn more about some essential insurance products.
To that end, allow me to explain why gold is a valuable asset to have on hand in times of need.
The Coronavirus disease, also known as COVID-19, is sweeping the globe at the time of this writing. As a result, a large portion of North America and the rest of the world are unable to go to work and are forced to live in solitude at home. It was the end of December of 2019 when I first learned of this illness. Gold was worth around $1,515 USD at the time. The gold price reached a high of $1,700 USD in March of 2020 before falling to around $1,650 USD at the time of this writing, as the virus spread around the world. Although gold has a history of short-term ups and downs, the long-term trend has always been one of upward movement.
I’ve often told clients that insurance is something you get but hope you never use. As with gold, having some on hand is always a good idea because in times of need, those with gold can sell off some of their holdings to get some quick cash. And this is why gold serves as a long-term insurance policy, not just in times of crisis.
Let me use inflation as an example to illustrate what I mean. According to the US Inflation Calculator, what would have cost $288.50 in 2000 now costs $433.38, which is a 50.2 percent increase in price. Your money has lost more than half of its purchasing power because you now have to spend more money to get the same thing!! The same ounce of gold was worth $288.50 on January 3, 2000, but on the first trading day of this year (January 6, 2020), that same ounce of gold was worth $1,558.00. * Over the course of that 20-year period, your asset value would have increased by 440.03% if you had kept $288.50 in one ounce of gold. So many people don’t realise how much they’ve lost because inflation is a gradual increase over time, but now that you know the numbers, you don’t need to be a mathematician to conclude that a growth of 440.33% is better than a loss of 50.22%.
Which would you prefer, cash or gold, as a means of saving? As it stands, if you save gold, you are protecting your long-term purchasing power, whereas if you save cash, you are constantly losing purchasing power to inflation.
If you haven’t saved any gold up to this point, don’t worry; it’s never too late. Fortunately, you now know. KNOWLEDGE IS POWER, and you may have heard this phrase before. If you just know something but don’t do anything with that knowledge—the what’s point?—then you don’t have power. Get my FREE report, “The Truth About Money – 3 Quick Key Facts You May Not Know!” and let’s continue your journey to knowledge and application together!