Through the increasing decline in interest rates and rising inflation rates, the truth is that our money, when allocated to a bank or stored in a safe deposit box, is losing value. For this reason, financial partners make an appeal to the investment of part of that same capital.

In this article, we will take a look at one of the most traditional investments that exist and how you can profit from this asset: gold.

Before we move on to why, let's figure out how we can invest in gold. Currently, this precious metal is divided into two sectors, they are: Physical investment, where we acquire tangible good in the form of gold bars, gold coins and jewelry; or investment in stocks and gold bonds.

Any interested person who is thinking of buying physical gold, should ensure themselves and be sure that its origin is reliable and take into account the contrast of the piece, dates, carats, hardness, color, purity among many others. Thus, it is especially important to make sure that you are dealing with a reliable company like Leilão Justo, where all parts are tested by a professional team before they are put up for auction.

Taking this into account, we will now know the main reasons for investing in gold.

1 – Stock market at unprecedented high levels (Potential Crash)

The subtitle says it all... With so many options for investing our money, the financial market may not currently be the best option for those looking for medium and long-term growth of their money. In fact, the global stock market is going through quite a bit, hitting new highs almost every week. However, everything that concerns the economy moves in a cycle. Due to emerging policy issues and public debt management, this growth can stop at any time, starting a regression cycle for most investors. In this situation, the gold market will attract large investments and we will be able to see a big rise in the prices of precious metals such as gold or silver.

2 - Economic depression and the price of gold

In cases of economic depression, such as the recent coronavirus pandemic, based on history, the usefulness of gold is always enhanced. In 2020, as stock markets fell, new gold price highs were seen, not seen since 2012, with many analysts predicting additional gains. Studies indicate that this was mainly due to the reallocation of capital by large investment funds in gold reserves, since this is known for its protection against financial uncertainty.

3 - Gold is a raw material

As we all know, gold is the main raw material in goldsmithing. About 60% of the overall production and consumption of gold is prepared in this way. However, as it is a highly effective conductive metal, there are a number of companies that use it in the production of high-segment electronic equipment, such as computer equipment, mobile phones, televisions, watches and even spacecraft.  

In this way, gold is valuable, not only because of its scarcity and finesse, but also because of its usefulness.

4 - Gold and its reserve character of value

As we have seen before, gold plays a major role in combating inflation. Due to its wealth-preserving qualities, the great advantage of gold over a coin is established because gold is a natural resource and, consequently, cannot be produced by man. From another perspective, the fiat currency is constantly losing value due to the high printing of currency that simultaneously reduces purchasing power. To give us a small notion, if 30 years ago we had chosen to buy 50 euros in gold, instead of keeping a 50-euro banknote in the bank, today we would have more than doubled its value in gold. On the other hand, if we chose to keep the banknote in the bank, today we would have less money due to the reduction in the purchasing power of the euro.

5 – Investing in gold stocks is not the same as investing in physical gold

It's true... Some investors like to invest in stocks because they offer exposure to gold. However, it is important to note that investing in stocks is not the same as investing in real physical gold. So, you might be making a mistake and investing in a gold mining company (focused on gold production) and thinking you're doing it directly in gold. Its intrinsic value is totally different! For this, nothing better than to acquire gold physically through a trusted company that commits to handing you a real piece, such as Leilão Justo.