Is gold capable of depreciating like any other investment?
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Is gold capable of depreciating like any other investment?
Gold has always been considered valuable, perhaps for various reasons: It shines beautifully, it does not rust, it is very resistant to many chemicals, it is heavy, it is maleable, it can be molten to form innumerable shapes, etc.
It’s value is, of course, and has been so for thousands of years. It is a reliable store of value, and appreciated everywhere in the World. The real power of gold is it’s ability to withstand time because nothing else can outlast time not even you or me but gold lasts forever heard of sunken gold? The pirates already long gone but their gold are still around.
When you look at investing into commodities. Gold isn’t really a commodity even though it is classified as being one. A commodity usually like oil wheat sugar after it is mined or harvested it gets consumed and in the act of being consumed lessens the current available supply and creates the new demand. So commodities don’t hang around forever in their natural state as there’s consistent demand to consume them and for each product the development downstream and upstream there are people at intervals or stages of the supply chain that wants to buy to change the commodity from one state to another to sell it on and so they help to create the industrial side of supply and demand. Therein lies a problem with gold because gold by itself cannot be destroyed or changed even if you hammer or stomp melt dissolve “it hangs around forever and ever” so there isn’t a lot of people in the gold supply chain, between the miner and dealer maybe you have a few refiners and as it cannot be destroyed how do you consume it to create new demand to justify higher price like say in platinum or palladium used as catalyst converters in cars?
Luckily gold is aesthetically pleasing and has good heat properties and so used primarily in electronics or jewelry, unluckily electronic companies likely to have bought at low prices with supply contract in place to hedge or shield them from any wild price fluctuations so they are not worried and old electronics and jewelry are being recycled and the gold yielded from it goes back to the marketplace so the supply is always constant. Other than that gold has a place for investors who hoard it and therein lies another problem, hoarding does not consume anything it’s still there under your mattress after 10 years and you only hoard something if you fear the lack of it. So fear disaster doom primarily sells and creates demand for gold, if there’s no fear gold prices will not fly so why you see the usual suspects who sell gold on internet also like to promote fear. Sometimes they don’t promote fear but chorus along when mainstream media report on issues like war or some other crisis.