It is always nice to discover which commodity, technology or cryptocurrency is called "the new gold" and perhaps even more interesting, why? Why do people invariably speak of a new “gold rush” if there is a promising investment opportunity and why is gold always the instinctive standard?
I will share my reasoning for calling gold the new gold why an investment in gold is something that every investor should consider as a part of their portfolio by briefly answering some of these questions.
Gold and silver are the only universal, and for millennia, accepted forms of money that exist. They meet all the characteristics that we assign to money. All other forms of payment are ultimately, either a derivative of these precious metals or they have failed. Currency is a good example. Euros, dollars, yuan, pesos, rubbles. All are forms of currencies that should give us the confidence that they are worth something. But inflation irrevocably causes your currency to lose value. For example, a dollar in 1930 was worth over 14 times as much as a dollar in 2019. All but a few recent currencies that people have tried in the past 5,000 years have become worthless. Gold on the other hand has been the standard for 5000 years. The gold standard!
Looking at the rows and rows of golden bars that can be seen in photographs taken in vaults and central banks, you might think that there is a lot of gold in the world. The opposite is true. According to the figures of the World Gold Council, all the gold ever mined in the world has the size of a 21.4 meter cube. This makes gold extremely rare. In addition, it is becoming increasingly difficult and more expensive to get to the remaining unmined gold.
Gold has less and less cultural value in Western Europe. Gold jewellery demand is declining and with a robust payment system, the need for having gold no longer seems as normal as it once was. But Western Europe is only a small part of the world, with an even smaller part of the world population. In countries such as China and India, each with over a billion inhabitants, gold plays a particularly important role in the lives of people. Storing gold as a reserve, giving gold jewellery as a New Year's gift or dowry, and paying in gold to family and friends are all forms in which they use and treasure gold. These are reasons why the demand for gold in these and other countries will not decrease significantly for the time being.
After reaching an incredible 1900 dollars in 2011, gold has not shown any new records for 8 years. This is actually a good thing and shows the stability that is common and consistent with the characteristics of this most precious metal. Revisiting these records is also, something that, looking at the fundamental factors, is in line with expectations. All are factors that could make this rare, historically essential real money a particularly good investment. Perhaps that good, that we could call gold “the new gold”.