Physical gold as wealth protection
Well known in the form of jewelry, one would almost forget that gold has always played a very important role in our monetary system. Gold has circulated as currency in many countries and has contributed to the prosperity of many civilizations. As we shall explain, gold, although it is no longer officially at the center of the monetary system, continues to play an important role, particularly at the level of central banks. As an individual we can also invest in gold and we will see why and how physical gold serves as wealth protection and anti-crisis insurance in a diversified portfolio.
Countries are constantly weakening their currency for various reasons, increasing their exports, financing public deficits, weakening the debt burden … It is an economic war or the
one who wins is the one with the weakest currency ! It is therefore unwise to compare a fiduciary currency to another fiduciary currency, on the other hand it is interesting to compare a fiduciary currency to the real currency, which is physical gold. The dollar is now the international reserve currency, except it is a currency that has weakened considerably against gold, indeed if we measure the dollar in gold, we find that it lost 80% of its purchasing power compared to gold since 1999. The dollar has also lost 77% against the Swiss Franc since 1970. But in reality it is not the gold price that rises, The purchasing power of gold has always remained stable, it is paper currencies like the dollar or the euro that lose their purchasing power. That is what happens when a government does not manage its economy well and prints money to solve all problems, and that is just the beginning!
Physical gold reserves of Central Banks
As mentioned above, physical gold can be considered as a safe haven or an insurance, but it is above all a currency that the central banks of the whole world keep in reserve and accumulate in order to maintain a feeling of confidence (Central banks are net buyers of gold). The emerging big powers, Russia and China, are increasing their reserves at a pace never seen before.