How gold retains its value even when the world is imploding

The sale of gold has increased considerably over the last couple of years. Refineries and mints like the Perth Mint have reported record demands for gold, particularly from countries like China and Russia who seem to be stocking up on the yellow metal in unprecedented ways. The market has changed for a lot of bullion dealers and buyers. There are a couple of things that you might want to consider when selling your gold to gold buyers Melbourne or in any city in Australia.

The Price of gold is susceptible to politics

Central banks in various countries around the world buy gold to diversify their reserves. Currencies can fall and others have become virtually useless as a result of some political and financial upheaval. To protect their country’s economies, central banks buy a lot of gold. Why buy something that requires a lot of security measures. Keeping a country’s gold under lock and key is not a cheap option, but why do governments hoard so much gold? Because of War! Countries need something other than paper currency in the case of war to trade. World War II is one reason why the U.S economy went into a tailspin and a recession. History has shown how paper currency cannot be relied on in times of economic crisis but gold is accepted everywhere. Gold does very well in times of civil conflict and strife.  It is unfortunate but, world peace would be very bad for gold.

Consumption of gold is much higher than its production

We use more gold than what can be mined on a yearly basis. The world’s mined gold can be 3,000 tons but the world consumes more than two times that amount. Where does the other gold come from then? The majority of the gold that makes up the shortfall comes from recycled gold. There are gold buyers Melbourne who buy old and unwanted gold from the public and resell it to refineries who return the metal to its purest form. However, this is still a small fraction of the amount of gold that is needed to fill up central bank vaults.  If gold was money, there wouldn’t be enough of it for every man, woman and child – after all, gold is a finite commodity. You can’t “manufacture” new gold when you run out, whereas you can easily print paper money when there isn’t enough of it to go around.

People love gold because of its value

There have been a lot of bubbles in history. The world has seen a number of crazy financial bubbles. Bubbles are known to do pretty well in economies plagued by bubbles. The reaction might be slow but bubbles are a great indicator that things are about to turn. Bubbles are dangerous. Trading in gold can be risky during such economic climates.

Gold has an inverse relationship to the dollar.

While Gold itself is not real money, it carries more value than paper currency. Money is only used as a means of exchange, it has no actual value. As a means of exchange, however, gold is used as a mirror image of the Dollar. Paralleling gold against a currency can be dangerous for said currency. If for instance a country were to devalue their currency (As China did) against the U.S dollar, the currency would be stronger thereby weakening the price of gold.

Gold is more valuable because even if the value of money (whatever currency it is) goes down, the nominal value of gold increases. When you sell your gold to a buyer always keep these things in mind: what the political situation is and the economic position of any country, how strong or weak the U.S. Dollar is and look at the demand. You can get good money for your gold whenever you decide to sell, how much you will get for it will depend on politics, the economy, the demand vs. supply – but most importantly you can always get cash for your gold when you need it.