We will discuss what gold bullion is, the history of gold, gold price predictions and why having gold as a part of your investment portfolio may be considered wise.
What is Gold Bullion?
Bullion is gold and silver that is officially recognized as being at least 99.5% pure and is in the form of bars or ingots. Bullion is often kept as a reserve asset by governments and central banks. – Investopedia.com
Gold bullion or gold bars are created from gold that has been mined from the earth. Bullion is typically heavier and larger than a gold coin. Gold bars can vary in size from as small as one gram to larger than 25 lbs. For example, a 1 kilogram bar of gold weighs approximately 2.2 lbs and is about the size of your iphone. One kilogram of gold is valued at approximately $65,000!
The purpose of creating gold bullion is for easy storage. The gold bullion bars are easily stackable and transportable. Specifically, banks and governments can store the bullion in secure vaults easily and safely.
History of Gold
The use of gold as a commodity and as money dates back at least 4,000-6,000 years. Approximately 4,500 years ago, the Mesopotamian artisans made jewelry from gold. However, it’s believed that gold was being used even prior to this era. For example, gold was used as a construction material to decorate walls, burial sites and masks of cultures such as the Egyptians, the Greeks and the Romans.
Gold for Trading and Exchange
It is believed that around 1,500 B.C. in Egypt, gold was being used as the official currency of exchange for merchants and traders. Shortly thereafter, gold took its place as the primary trading currency throughout the world. Mining for gold became a major industry world-wide. Coins made of gold were produced and distributed throughout Europe and Asia.
Gold Standard Dollars
Fast forward to the year 1792. The United States passed the Coinage Act which dictates that silver and gold will be used as the standard for valuing currency. The Act defined the U.S. Dollar as equivalent to 24.75 grams of gold and 371.25 grams of silver. The paper currency printed in the United States was officially backed and redeemable in silver and gold.
While individuals use gold coins for exchange, governments have historically used gold bullion or gold bars as a reserve asset. Gold bullion stored in vaults was considered to be the anchor that gave paper currency it’s strength. In fact, paper gold certificates in the United States used to have “payable in gold” stamped on them. This let users know that they could potentially redeem the piece of paper currency for real money – gold. These paper gold certificates were considered equal to other currencies in value until 1933 when the US Government took the Dollar off of the gold standard.
$10,000 Gold Certificate By National Museum of American History – Image by Godot13, Public Domain, Courtesy of Wikidpedia.com
Then in 1971, the U.S. Dollar was devalued in price and the program of conversion of dollars back to gold for foreign countries was discontinued. In other words, U.S. Dollars were no longer backed by gold. The gold price forecast has always been upward and it continues today.
The Beauty and Utility of Gold
Shiny gold coins and jewelry have been considered beautiful for centuries. Women and men have donned gold jewelry for as long as we have kept track of history. From a physical perspective, gold is malleable and easily altered to make jewelry, coins or even thin sheets. Scientifically, gold is non-reactive and non-corrosive, both of which are highly desirable characteristics. Gold is even safe to use in the human body. For example, dentists have used gold for years to repair teeth.
Gold Bullion Has a Limited Supply and Growing Demand
The Supply of Gold Bullion Is Finite; Demand for Gold Includes Industry, Jewelry and Money
There is a limited supply of gold on Earth. Moreover, gold miners throughout the world have a finite quantity of gold available for mining. At some point, the amount of gold removed from mines will diminish and become zero.
At the same time, gold bullion demand continues to grow. For instance, gold has many uses in technology, jewelry, medicine and money. Jewelry made of gold has been popular for millennia. In addition, gold continues to grow in demand and popularity, especially in Asia. In fact, 70-80% of gold mined today goes to create jewelry. All of these factors influence the gold price forecast.
Also, there are many industrial uses for gold including electronics, aerospace and medicine. For example, gold is a very efficient conductor of electricity. This property is utilized in many electronic components such as cell phones and computers. In addition, gold is a superior element to work with in dentistry. More important, gold is non-reactive, malleable and has anti-bacterial properties.
Finally, gold bullion and gold coins remain in demand all over the world. Coins made of gold have been used for hundreds or thousands of years. They are easily recognizable and highly desirable. More importantly, gold coins have withstood the test of time and continue to be sought after in the 21st century. Real money is sound money. Obviously, gold is real, sound money.
Five Reasons to Buy Gold Bullion:
- Gold is a store of value. National currencies (even the U.S. Dollar) come and go. But Gold has been around for thousands of years as real money.
- It is a liquid asset. Gold bullion (and other metals) can be easily bought and sold in most large cities around the world. It can be exchanged for most currencies this way.
- Gold bullion is a tangible asset. You can hold gold coins and gold bullion in your hand or put them in your safe. No waiting for the bank to open to get them. No worrying about destruction by fire or a hacker.
- It is a hedge against inflation. Gold tends to thrive during a crisis. Investors tend to jump into gold when stocks go lower.
- Gold bullion is private. No other asset offers privacy like a gold coin. A transaction in gold between you and another person is truly a private affair.
Gold Bullion in Your Portfolio
It is common to hold anywhere from 5-10% of an investment portfolio in physical gold bullion. In fact, there are some very large international investment portfolios that hold as much as 30% of assets in gold.
Buy Gold as Physical Coins/Bars or Gold Stocks
Investing in gold has never been easier. Gold merchants and brokerage firms are competing for your business online. If you want to purchase physical gold, you can do this at your local coin shop.
Another option for purchasing gold is buying online. Buying from a website has become more secure in recent years, but you must do diligent research to verify the buyer. Only buy from established suppliers that have been around for a long time and have positive feedback. Preferably you can get a recommendation from a friend.
Finally, buying gold stocks is just as easy as buying stock in GM or Amazon. Many online brokerage firms offer the ability to buy these shares for a reasonable fee. With the gold price forecast looking positive, now may be the best time to invest.
Future of Gold
Unemployment, Debt, 0% Interest and Fed Money Printing Drive Gold Prices Higher
We at Piggy Bank Coins believe that gold (and silver) has a bright future. Holding a real money asset such as gold will always be highly regarded by investors. In addition, having gold in your investment portfolio is considered by many to be a safe and secure option. It’s important to grow your wealth while minimizing risk. Specifically, gold is a real, tangible money that can be a store of wealth for a lifetime.
We believe the gold price forecast indicates that demand will continue to grow and that investors should continue to hold gold and silver. With the political and economic instability created in the United States, gold prices will likely increase. For instance, investors will continue to move toward safe harbors. Make no mistake, gold is the safe harbor.
Second, since 1944 the US Dollar has operated as the world reserve currency. However, the US economy appears to be faltering with high unemployment, high national debt, near-zero percent interest rates and inflation from Federal Reserve money printing. As a result, investors will be looking for something safe to hold on to, and precious metals may be that rock.
The Gold Price Forecast Predictions
Four Gold Price Predictions: $2,300, $3,000-$8,000, $15,000 and $26,000.
Goldman Sachs raised its gold price forecast in July 2020. The investing firm believes that gold will hit $2,300 per ounce as investors flee other falling price investments such as real estate.
According to Jeff Clark, Senior Analyst at GoldSilver gold has a 95% likelihood of going higher in 2021. In addition, he is predicting $3,000-$8,000 gold in the next 5 years.
In an interview with Kitco News in mid-2020, Investor Jim Rickards predicts that gold will rise to $15,000 per ounce before 2025. He bases his prediction on inflationary forces.
In the same interview with Jim Rickards, Investor Peter Schiff predicted gold will rise as high as $26,000 per ounce. He bases his prediction on extrapolating DOW Jones trading values in relation to gold in 1932 and currently.
Learn More about Gold and Silver
Get a copy of the “Free Gold and Silver Buyer’s Guide” today. It’s free and has some great information in it about investing.
If you want to learn about the history of money, check out Mike Maloney’s free “Hidden Secrets of Money” video series. It’s a goldmine of information that can help you better understand money and where the world stands today financially. Highly recommended!
Disclaimer: It is important to note that Piggy Bank Coins does not provide financial advice. We don’t endorse or recommend any financial investments. Instead, we provide information for educational purposes to those seeking knowledge regarding personal finance. However, in the spirit of transparency, note that the author is an investor in cryptocurrencies, precious metals and some equities.
In addition, The Federal Trade Commission (FTC) requires that Piggy Bank Coins disclose to readers that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. Moreover, we try our best to keep things fair and balanced, in order to help you make the best choice for you.