Throughout human history, gold has attracted the attention of numerous civilizations and has been behind the flourishing and fall of many others gold ira companies.

Factors such as its beauty, malleability and scarcity have linked it to the concept of value. The use of gold is linked to the history of money itself, since the first coins in Ephesus, Turkey about 2,700 years ago.

“Gold is money. Everything else is credit” – John Pierpont Morgan

This famous phrase by the famous American banker was uttered in 1912 at a hearing before the American Congress. While the central theme of the hearing was the function of credit in the banking system, the idea that transcended is that money is gold, and the rest derives from this relationship; strongly linked to an issue of trust in counterparts.

Many nations dabbled with the gold standard, where they set the value of their currency to the reserves they had in this mineral. One of the major changes in the last century was the abandonment of the gold standard in the United States; giving rise to a couple of rallies of significant proportions.

Gold as an investment
One of the virtues of gold as an asset class in a portfolio is to provide protection against inflation. Additionally, a portfolio will seek to participate in uncorrelated asset classes to optimize its returns.

Including gold in an investment strategy can consider physical gold, to liquid stock instruments at your fingertips.

“In the absence of a gold standard, there is no way to protect savings from the loss of value caused by inflation. “There is no safe haven of value” – Alan Greenspan

If a nation that previously backed its currency with gold decides to start printing many more banknotes, an inflationary process could be triggered. Those who maintain a direct investment in gold could be protected against these changes. Assuming that the gold reserves of said country did not move in the same direction, or that global gold production did not grow excessively.

Although there is debate about what the intrinsic value of gold is, we have seen that its price moves according to supply and demand shocks. Although some theorize about the price floor as the marginal cost of extraction.

Gold cycles in periods of volatility
The forces that move financial markets are usually represented by fear and greed. In the particular case of fear, it is commonly a trigger in the behavior of the price of gold. That is why having exposure in our wealth strategies usually makes sense.

In the case of the Great Financial Crisis of 2008-2009, one of the first reactions was an increase in the price of gold. Subsequently, while confidence in the financial system was recovered, and the specter of inflation did not appear; It was when we saw a collapse in gold prices.

This year, given the panic reactions in the financial markets, as a result of COVID 19; Gold initially showed behavior in tandem with the stock market. Eventually it resumed its upward path and in a few days returned to the previous highs of the year, reaching advances of 37% in the first days of August.

How much gold is mined in the world?
“Gold is taken out of the ground in Africa, or some other part of the world. Then it is melted, another hole is dug in the underground, it is buried again and people are paid to stay nearby armed to take care of it... Anyone watching us from Mars must be scratching their head wondering” – Warren. Buffett

It is estimated that, at the end of 2019, all the gold mined in history reaches about 197,576 tons, of which approximately two thirds were obtained since 1950. If all this gold were put together, it would form a cube of only 21.7 meters per side.

How to invest in gold on gold ira
Including gold exposure in your heritage can range from including jewelry or centenaries (physically) or taking advantage of the digital tools that are at your disposal.

There are those who prefer to invest in shares of mining companies, while other investors prefer to have exposure to the commodity (raw material) as such.

Through gold ira you can acquire shares of international or national gold mining companies such as Newmont Corporation (NEM ), Barrick Gold (GOLD N), Kirkland Lake Gold (KL N), Royal Gold (RGLD *), Fresnillo (Fres) , Peñoles (Pe&oles), Minera Frisco (MFRISCO A-1), among others.

Another vehicle available in gold ira are ETFs (index funds). ETFs are instruments that replicate the behavior of indices, or commodities , efficiently and can be bought and sold during the market session as if they were stocks.

Investors can acquire securities that are backed by physical gold, by derivative contracts that replicate the behavior of gold; or that are made up of a basket of companies dedicated to gold mining.

For the most active and reckless investors there are also leveraged ETFs that are related to the behavior of the price of gold, whether for or against. A leveraged instrument is subject to greater volatility, but can give greater exposure (e.g. double the daily return of gold) or contrarian exposure (when the price of gold falls the opposing ETF rises).

If you are interested in incorporating gold exposure into your strategy, look for these alternatives within gold ira, in Trading and Trading Pro.