Gold has many advantages over other assets, making it the ideal form of money. It has no expiration date and is still found in its original form. Gold is also portable and divisible, meaning it can be divided without changing its value. It does not dissipate, burn, or poison, and it has been used as a form of value for centuries.
Gold's performance as a stable value standard is exemplary, and it is rare enough to prevent overproduction. It is malleable enough to be minted into coins, bars, and bricks. Gold is the metal we turn to when other forms of currency don't work, meaning it will always have value in good times and bad. The gold standard made possible extraordinary stability in bond yields during the 19th century, something that has never been replicated in fiat currencies. Gold's great use is as a proxy for money when artificial forms of money are not properly restricted in their supply.
In these times, the unexpandable supply of gold makes it a much more reliable reserve of purchasing power than currency. Nothing does this job as reliably and as well as gold. Traders discovered a clever way to improve the gold-based barter and trading system over time. In an economy where economic and political considerations have combined to produce a paper currency that works in parallel with gold, people will choose to keep gold and spend paper when the currency shows signs of dangerous expansion of supply. Gold is particularly good for use as money because it is rare and stable. Proponents of the gold standard argue that such a monetary system effectively controls credit expansion and applies discipline in lending rules since the amount of credit created is linked to a physical supply of gold.
We will analyze the fundamentals of gold trading and what types of securities or instruments are commonly used to gain exposure to gold investments. Today, more than 95% of the world's gold is preserved as a store of wealth, either in bullion vaults or as jewels. Gold has been given a power that surpasses any other commodity on the planet, and that power has never really disappeared. A piece of gold may not have immediate physical value to the person holding it, but it can stimulate a subjective personal experience or be objectified if adopted as an exchange system. We have identified six reasons why gold is the best money and why dollars and bitcoin don't come close. The trick with gold is to understand the causes of these successive phases, recognize them, and act accordingly.
