What is gold? Why is it so sought after? What are the uses for investing?


By Mike Anicito

Think hard, try to remember back to your high school chemistry class.  What is the atomic symbol for gold? ……That’s right Au.  Au is derived from the Latin word aurum, meaning gold.  Atomic number? …You probably didn’t quite remember that one but it’s 79.  There are 79 protons at the nucleus of every gold atom.  Gold is one of the least reactive elements we have on this planet, meaning when it is found, it is found free forming.  Most of the Earth’s gold has seeped down near the planet’s core due to its density.  The gold that is mined in places like South Africa and Asia are deposited there from asteroids that hit the Earth billions of years ago.  Take a look at your wedding ring or necklace.  The gold you are holding or wearing is literally from out of this world. 

Gold has been sought after since longer than man has kept records.  In the Divine Comedy, Dante’s Inferno had a place in Hades for those who tried to “make” gold.  There used to be a gold standard for which monetary policy was based.  Since the 1930’s the United States has since gone to a fiat currency (or printing press).  Think about what that means.  For all the dollars printed and distributed there was a vault or many vaults that held the gold that backed the paper.  Currency had a real value.  A far cry from where we are today.  According to the World Gold Council, if every piece of gold on Earth were placed next to each other, the cube would only measure about 66 feet in any given direction. 

So what does this all have to do with your money or reasons why investors own gold as an investment?

If you haven’t gotten the gist already, gold is a rare element found on the Earth.  It is hard to find and can be dangerous to mine.  The metal is also valuable beyond its properties.  Because it is malleable, it is often used in dentistry, electronics, wiring, glass production, and leafing.  

These are all contributing factors to why people want to own it in their portfolio.  China and India, countries with populations in the billions, are the largest consumers of gold. 

Owning gold itself gives you a diversified, real asset.  Gold can be used to protect purchasing power when there is expected inflation along with the potential to reduce volatility with such a non-correlated asset. 

Did you know that you could put gold coins in an Individual Retirement Account (IRA)?  You can.  But not any gold coins, only coins that are minted in the United States. 

Gold is a fascinating element that has had a bizarre relationship with mankind.  I often wonder if man found gold or if gold found its way to man. 

 

Michael Anicito, CFP®

Inspire Investment Solutions, LLC - President

646.606.2111

mike@inspireis.com

www.inspireis.com

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