Gold a safe haven - Juels Limited News Article

Gold – a safe haven

Following the emergence of gold as money in ancient times, its importance continued to grow throughout Europe. England was the first to develop its own metals-based currency in 775, with the pound, symbolising a pound of sterling silver.

Shillings and pence were all based on the amount of gold or silver represented and, eventually, gold symbolised wealth throughout Europe, Asia, Africa, and the Americas.

The US started the bimetallic standard, by stating that every monetary unit in the United States of America had to be backed by either gold or silver. For example, one US dollar was the equivalent of 24.75 grains of gold. The coins that were used as money simply represented the gold or silver that was presently deposited at the bank.

In 1913 the Federal Reserve was created and started issuing promissory notes (the present-day version of our paper money) that could be redeemed in gold on demand. The Gold Reserve Act of 1934 gave the US government the title to all the gold coins in circulation. This lasted until 1971 when the dollar ceased to be backed by gold, largely due to inflation.

Even though gold no longer backs the US dollar or many western countries’ currency, it is still important to the global economy. To validate this point, there is no need to look further than the global balance sheets of the International Monetary Fund (IMF).

Presently it accounts for the holdings of one-fifth of the world’s supply of above-ground gold. In addition, several central government banks have added to their present gold reserves, reflecting concerns about the long-term global economy.

It is becoming increasingly obvious that political and economic uncertainty is another reality of our modern economic environment, with inflation and the global instability and tensions in eastern Europe, the Middle East, Africa.

For this reason, investors typically look at gold as a safe haven during times of political and economic uncertainty.

History is full of collapsing empires, political coups, and the collapse of currencies. During such times, investors who held gold were able to successfully protect their wealth and, in some cases, even use the commodity to escape from all of the turmoil.

In order to ascertain the investment merits of gold, check its performance against the top performing 500 equity commodity shares over the last financial year. Gold has outperformed these by a wide margin, generating a return of 18.9% compared to 10.4% within the same period. At Juels’ Limited we have a significant amount of holding in either gold bullion value coins and bullion bars of all weights. If you are considering investing in gold coins or bullion please call into our store at 32 London Street for more information.

 

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