How Does Gold Affect The Economy Around Us?

It is vital to remember that gold has a significant impact on the worldwide economy, especially the one that revolves around us. From the idea, the golden standard was the source of it, until you got the price of it.

Therefore, you should understand that its value depends on its safety when compared with other investments that surround you. Have in mind that it features a significant impact on economy wanes and waxes, and everything depends on the protection of different investments as well.

At the same time, when other investments feature high risks, you will be able to relocate your capital into it as the way to protect yourself and hedge over inflation.

The facts state that you will be able to determine whether the economy is healthy or not by checking the gold bullion price throughout history.

For instance, when the USA required a gold standard, the precious metals were highly valuable, but they are still useful when it comes to safety and protection against rising prices.

History of Gold Value

Before people used it as coinage, they considered it an essential part of the things that surround us. Archeologists have found gold jewelry in the Tomb of Djer, who was king of the First Egyptian Dynasty.

At the same time, it features beauty and shine that was used for numerous purposes. The facts state that Egyptians were the first people who became master of creating jewelry and production.

It was the currency in the fifth century Before Christ, and during the Roman Empire, Emperor Augustus set the price of it at forty-five coins to the pound. Since then the value increased and reached its maximum in 2011.

According to historical perspective and things that happened before, we can expect that value will drop below a thousand dollars for an ounce as time goes by.

Is Gold The Ultimate Bubble?

According to George Soros, who is a commodities trader and one of the wealthiest people in the world, it is a bubble that will burst in the future.

He stated that gold, when compared with other commodities and investment plans such as housing or oil, can quickly increase due to high demand and speculation, but in general, it features low intrinsic value.

Therefore, the high prices that happened in 2011 were just the answer on the situation that occurred after a Great Recession in 2008, because people were afraid to invest in other commodities and they thought that it is the ultimate way of protecting their wealth and money.

If you wish to see what affects the prices of this particular precious metal, you can do it by clicking here for more information.

Reasons to Invest In Gold

People tend to invest in it for these reasons:

  • Hedge and protection against inflation that may happen
  • In case that stock market starts to decline, people tend to reinvest in it so that they can protect their assets.
  • The reason is due to the falling dollar, which is another crucial aspect in which gold prices determine the current economic state of country and world you live in.

For these three reasons, it is considered as one of the best investments that will provide you a safe haven wherever you are. The question is whether you will get what you expect from it.

According to research, it is an excellent choice that you can include in a well-diversified portfolio, because it will protect your investments in case of the stock market crash, but the protection does not last too long, and that is something you have to remember.

Things to Know Before Investing In Gold

Have in mind that as soon as the price of gold reaches high levels, everyone thinks that it is time to purchase it. However, you will be able to do it only if you have enough money so that you can get inside the speculation and wait for ups so that you can earn a profit.

However, the higher the price is, the risk increases, and that is a fact for all commodities, including it. Therefore, you will never know when this particular bubble will burst, and what will happen next.


Even though the gold standard is not relevant, anymore, it includes the process in which countries are tying their currency based on the reserves that they have. Therefore, they are willing to redeem the money for its current value in stockpiled amounts.

After the financial crisis that happened in 2008, people started thinking that the standard should return, but that would cause severe deflation in general, and cause another great depression that will affect everything that surrounds us.