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Why gold stands the test of time to retain its value

14th March 2024 Print

Gold has fascinated us for as long as we’ve been able to recognise it, and it remains to this day a byword for luxury, value and opulence. As a species, we’re estimated to have mined over 212,000 tonnes of gold over the years and show no signs of slowing down.

But what has made gold so consistently alluring and will it continue to hold strong as a barometer of value? We’ll explore below.

What makes gold so inherently valuable?

In an age of increasingly digital economies, it might be puzzling to see gold retain its status as one of the most valuable substances on Earth. How, practically, does it hold up to currencies or other, more flexible resources?

The truth includes more than a small element that’s not at all practical. The natural beauty of gold is a big part of what led it to catch our eye millennia ago. That visual appeal, allied to its rarity and durability, became a major part of gold’s mystique – and, once that perception becomes entrenched, it’s very difficult to dislodge.

These properties haven’t changed over the years. We might have mined more than ever but gold retains a feeling of exclusivity thanks to its relative scarcity. The resultantly continued appeal of gold jewellery makes pawnbroking a consistently viable option for those who find themselves in financial difficulty, for example.

What does the future of gold look like?

Gold’s relative stability has made it a popular investment option for many years; it’s seen by many as something of a safe haven that’s not subject to the worst of the volatility that can be experienced by currencies or companies. That can be very attractive, especially in times of economic uncertainty as the UK has experienced in recent years.

That’s one good reason to expect the price of gold to increase in the coming years, with economic anxiety on the rise – and likely to remain so as the effects of climate change become more and more pronounced.

Gold’s relationship to currency also indicates a likelihood for its value to go up. Inflation – the rate at which the prices of goods and services become more expensive – almost always goes hand-in-hand with a higher gold price, as demand grows for something with a better retention of value.

The US dollar specifically has a key relationship to gold as it’s the currency in which gold is priced. The two things, as a result, have an inverse correlation in price trajectory – if the dollar is perceived to be less valuable then the amount required to buy gold will increase.

It is truthfully impossible to predict exactly how gold will perform over the years to come but its place in the public consciousness is well entrenched and the signs are positive that it can expect to improve its value overall.