Reasons to Invest in Gold During Inflationary Period

 

The US economy is currently experiencing extreme inflation, with annual inflation reaching 7.9 percent, the highest on record in 40 years. 

With a rich history dating back to Ancient Egypt, gold has always been the most prized metal of mankind for its artistic and cultural value. Demand for gold-backed investment products increased as well, with gold ETFs seeing net inflows of 187.3 tonnes (US$11.8 billion) in March, bringing total holdings just below the August 2020 record of US$240.3 billion. 

It is a symbol of wealth and the focal point of almost every special social gathering in many parts of the world. More than 1,400 metric tonnes of the metal are consumed each year for jewellery and other decorations.

But the reason to buy gold goes beyond the customary yearly celebrations or the need to display affluence; people can also view the metal as a form of investment and growing their wealth. This is especially true during times of high inflation, where the cost of living rises and the value of currency depreciates.

Inflation fears have sparked a new wave of gold buying since the beginning of 2022, nearly pushing the precious metal past its all-time high of $2,070/oz set in August 2020.

1. Golds as a Store of Value

Even in ancient times, the notion that gold has monetary value was widely accepted, and for the most part, this principle has worked in practise. During the Roman era, one ounce of gold was enough to purchase a toga and accessories. The same amount of gold can now buy a tailored suit or a wedding gown. 

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