Gold is respected throughout the world for its value and rich history, which has been interwoven into cultures for thousands of years. Coins containing gold appeared around 800 B.C., and the first pure gold coins were struck during the rein of King Croesus of Lydia about 300 years later. Throughout the centuries, people have continued to hold gold for various reasons. Societies, and now economies, have placed value on gold, thus perpetuating its worth. It is the metal we fall back on when other forms of currency don’t work, which means it always has some value as insurance against tough times. Below are eight potential reasons to own gold today.
Unlike paper currency, coins or other assets, gold has maintained its value throughout the ages. People see gold as a way to pass on and preserve their wealth from one generation to the next. Since ancient times, people have valued the unique properties of the precious metal. Gold doesn’t corrode and can be melted over a common flame, making it easy to work with and stamp as a coin. Moreover, gold has a unique and beautiful color, unlike other elements. The atoms in gold are heavier and the electrons move faster, creating absorption of some light; a process which took Einstein’s theory of relativity to figure out.
Although the U.S. dollar is one of the world’s most important reserve currencies, when the value of the dollar falls against other currencies as it did between 1998 and 2008, this often prompts people to flock to the security of gold, which raises gold prices . The price of gold nearly tripled between 1998 and 2008, reaching the $1,000-an-ounce milestone in early 2008 and nearly doubling between 2008 and 2012, hitting around the $1800-$1900 mark. The decline in the U.S. dollar occurred for a number of reasons, including the country’s large budget and trade deficits and a large increase in the money supply.
Gold has historically been an excellent hedge against inflation, because its price tends to rise when the cost of living increases. Over the past 50 years investors have seen gold prices soar and the stock market plunge during high-inflation years. This is because when fiat currency loses its purchasing power to inflation, gold tends to be priced in those currency units and thus tends to arise along with everything else. Moreover, gold is seen as a good store of value so people may be encouraged to buy gold when they believe that their local currency is losing value.
Deflation is defined as a period in which prices decrease, when business activity slows and the economy is burdened by excessive debt, which has not been seen globally since the Great Depression of the 1930s (although a small degree of deflation occurred following the 2008 financial crisis in some parts of the world).. During the Depression, the relative purchasing power of gold soared while other prices dropped sharply. This is because people chose to hoard cash, and the safest place to hold cash was in gold and gold coin at the time.
Gold retains its value not only in times of financial uncertainty, but in times of geopolitical uncertainty. It is often called the “crisis commodity,” because people flee to its relative safety when world tensions rise; during such times, it often outperforms other investments. For example, gold prices experienced some major price movements this year in response to the crisis occurring in the European Union. Its price often rises the most when confidence in governments is low.
Much of the supply of gold in the market since the 1990s has come from sales of gold bullion from the vaults of global central banks. This selling by global central banks slowed greatly in 2008. At the same time, production of new gold from mines had been declining since 2000. According to BullionVault.com, annual gold-mining output fell from 2,573 metric tons in 2000 to 2,444 metric tons in 2007 (however, according to Goldsheetlinks.com, gold saw a rebound in production with output hitting nearly 2,700 metric tons in 2011.) It can take from five to 10 years to bring a new mine into production. As a general rule, reduction in the supply of gold increases gold prices.
In previous years, increased wealth of emerging market economies boosted demand for gold. In many of these countries, gold is intertwined into the culture. India is one of the largest gold-consuming nations in the world; it has many uses there, including jewelry. As such, the Indian wedding season in October is traditionally the time of the year that sees the highest global demand for gold (though it has taken a tumble in 2012.) In China, where gold bars are a traditional form of saving, the demand for gold has been steadfast.
Demand for gold has also grown among investors. Many are beginning to see commodities, particularly gold, as an investment class into which funds should be allocated. In fact, SPDR Gold Trust, became one of the largest ETFs in the U.S., as well as one of the world’s largest holders of gold bullion in 2008, only four years after its inception.
The key to diversification is finding investments that are not closely correlated to one another; gold has historically had a negative correlation to stocks and other financial instruments. Recent history bears this out:
Properly diversified investors combine gold with stocks and bonds in a portfolio to reduce the overall volatility and risk.
Gold should be an important part of a diversified investment portfolio because its price increases in response to events that cause the value of paper investments, such as stocks and bonds, to decline. Although the price of gold can be volatile in the short term, it has always maintained its value over the long term. Through the years, it has served as a hedge against inflation and the erosion of major currencies, and thus is an investment well worth considering. (For related reading, see “Has Gold Been a Good Investment Over the Long Term?“)
By TONY DALTORIO Updated Jun 22, 2019
Their negative mindset is like a wet blanket, smothering anything productive or beneficial before it can ignite.
A positive mindset is critical to achieving your goals and dreams in life, according to mindset expert Angie Zimmerman, author of 7 Steps to Master Your Mind to Increase Sales and Boost Productivity. This kind of mindset can be cultivated, but only if you are willing to open yourself up to new ways of thinking.
I recently sat down with Zimmerman to discuss some of her observations about what it takes to put your mind on the path to success.
According to Zimmerman, the most important thing you can do is to embrace a growth mindset. This is the mindset that will allow you to dream big and push the boundaries of your ideas to new levels.
She subscribes to the maxim, “Everything on the way rather than in the way,” which comes from leading educator Dr. John Demartini.
Instead of judging experiences in terms of failures and successes, frame them in a positive light. You will have challenges and obstacles along the way. Recognize that all of them can help you grow and become a better person.
Another mindset expert, Carol Dweck, explained that if you aren’t in a growth mindset, you probably have a fixed mindset, which is dangerous because it will ultimately stifle your ability to reach new achievements.
“A fixed mindset is when people believe their basic qualities, intelligence, talents and abilities are just fixed traits. They have a certain amount and that’s that,” Dweck said.
With a growth mindset, people believe that their talents and abilities can be developed over time through experience and mentorship, so they push themselves and “go for it.”
“They’re not always worried about how smart they are, how they’ll look or what a mistake will mean,” Dweck explained. “They challenge themselves and grow.”
“Sometimes you just have to jump off of a cliff,” Zimmerman said.
Do something completely out of your comfort zone and your mind will become more nimble. As a result, you’ll learn to push yourself to new heights. Those who fail to get out of their comfort zone often end up with a rigid mindset.
An unwillingness to take risks stymies progress, and you will ultimately fizzle out.
Just like the high achiever from high school — the person voted “most likely to succeed,” but who doesn’t accomplish anything beyond that — you have to push yourself or you will fail to launch.
“They become afraid of making mistakes. They become afraid of tarnishing their image,” Dweck said.
Part of taking risks is being able to learn from your mistakes. A blunder can also be an amazing blessing because you can use your misstep as a jumping-off point toward something new.
“The universe gives us gentle
reminders of what we need to do,” Zimmerman explained. “However, if we ignore
that advice for too long or fail to understand the message and take action,
that is where we receive our greatest life lessons.”
Instead of trying to hide or make excuses, consider what you can take away from these experiences as you go forward.
No matter what your level of education, you should never stop learning. According to Zimmerman, a thirst for knowledge is something that can never be quenched, and should be a lifelong quest.
She explained having an endless supply of curiosity is key to seeing beyond what’s in front of you, discovering what you are truly capable of and keeping yourself in a growth mindset.
“I can honestly say that no amount of knowledge is ever enough to quell my thirst in life to know, have and be more than I am today,” Zimmerman said.
“Another important factor is to cultivate gratitude by celebrating and sincerely being happy for other people’s successes,” Zimmerman said.
Acknowledging and delighting in others’ successes will help you shirk feelings of bitterness or resentment, and will allow you to focus on the positive things you have accomplished as well.
“In life, you cannot receive that which you resent,” Zimmerman added. “Therefore, if you resent or are upset about other people’s success, this leads to you being unable to achieve the level of success you desire.”
As a rule, you reflect the characteristics of the people with whom you surround yourself. As motivational speaker Jim Rohn has said, “You’re the average of the five people you spend most of your time with.”
In the same way, your mindset will reflect whatever information you feed it. That’s why it’s key to fuel your mind with positive information on a daily basis.
“Most importantly, you must surround yourself with positive influences that can help you live your best life and become your best self,” Zimmerman said.
Don’t discount the importance of both physical and mental agility.
Zimmerman recommends embracing both, since they work together to keep you alert and focused.
She says being fit and healthy creates more positive thoughts than negative and helps you to take the daily action necessary to achieve your priorities.
“What I mean by that is, by staying fit and healthy, you have endless energy and enthusiasm for life, and act in a more loving way.”
When you are feeling low on energy and neglect to work out for a little while, your enthusiasm and positivity wanes, which in turn allows negative thoughts to take hold.
Zimmerman likened those negative thoughts to a river of energy running out of your body. “You lose your vitality and you are far less likely to attract all the positive things, people and opportunities that you want from life,” she said.
Energy equals momentum, which is particularly important in business. It’s about having the drive and endurance to manage your daily activities.
“Physical exercise and positive thoughts assist with that, and give you a constant boost of ‘feel-good’ endorphins,” Zimmerman explained. “It all works to make it easier to attract positive circumstances into your life.”
Understanding capital goes further than thinking of money alone. Most people think of financial capital and physical capital (buildings, gold, and goods) but we forget about the intangible forms. These intangible forms are interwoven into finances and physical forms that allow us to create real value that in turn will create real wealth.
So, what is non-monetary capital and how does it flow between people?
Consider a Software Development Team in a business. In the morning team meeting, they are discussing how to design a new app by exchanging intellectual capital. Once the meeting is done, a couple of them chat together about their weekends and this is a bonding capital called social capital. At the end of the month, the team leader takes them out to lunch at it build a cultural capital within the team (community). And, of course, there is a monetary exchange to pay for lunch, financial capital.
This is the one that we are all familiar with, the means by which pretty much all humans today exchange goods and services.
These assets begin as raw materials extracted from the Earth and are developed into more complex forms such as houses, cars, consumer goods, etc.
Living (Natural) Capital
Involves both the living organisms upon which we depend and necessities of life which sustain us: plants, animals, water, air, soil, and the like. The currency of living capital is the diversity, abundance, and quality of these resources.
A person who is wealthy in social capital might be described as “well connected” or “highly influential.” She is in good standing with the people around her and trades in gifts and favors.
This is the knowledge that you possess, acquire, and exchange with others. We are taught that intellectual capital is the primary factor for success in the world, which means that it should be readily exchanged for financial capital; Although this is quickly fading in the new digital age.
The things that you do comprise your experiential capital: work, travel, build, cultivate, etc. This form of capital goes hand-in-hand with intellectual capital, and we generally learn best when they are combined.
Your understanding of yourself and your place in the universe can be measured in terms of spiritual capital.
Unlike all previous forms of capital, which are held and exchanged by individuals, cultural capital can only function on the community level. Think of it as “zooming out” on social capital and observing the bigger picture of interactions between people. The currency of cultural capital is things like art, music, stories, history, and holidays.
If you are not feeling right, even if you have loads of money, perhaps look at the other forms of Captial and add to those.
Compiled by: Mark Adams
How does an indulgence allowance sound? You know, a little guilt-free spending that doesn’t find its way to creditors, insurance agents, utility companies, or grocery stores?
It’s called fun money and it’s just for you.
Fun money (or pocket money) keeps you sane as you continue to make the tough, daily sacrifices it takes to win with money. We like to think of it as the icing on the budget—a sweet topping that, in moderation, can actually help you reach your money goals. Here’s how it works:
You need food, water and shelter. You don’t need to get a manicure or play 18 holes of golf. But here’s what happens if you don’t budget some “me” money: you’ll spend it anyway.
The reason a cash flow plan works in the first place is that every dollar gets a name. So even if you have the discipline of a monk and vow not to spend on small luxuries, trust us, you or your spouse will eventually buy something just for fun. And then your beautiful budget is blown!
So do your budget a favor and factor in some fun before the month begins. Because the more realistic your plan is, the more likely it is to actually work.
Fun money often gets lumped into one of a few categories: your entertainment fund, your restaurant fund or even your miscellaneous fund. It’s none of these. It’s a separate amount to spend however you want, whenever you want.
The beauty of pocket money is you don’t know what you’re going to buy with it yet. You can use it as the mood strikes you, without guilt.
But try to avoid the temptation to use your fun money as a catchall for household items you forgot to work into the budget. Or if your light bill and car repairs exceed your monthly expectations, tweak your cash flow plan or dip into your emergency fund to seal the leak. Your fun money is not overdraft protection for life’s unexpected expenses. Protect it—or you’ll find a thousand non-fun ways to spend it.
Your pocket money might be $10 or it might be in excess of $100 per month. Depending on your income, debts and long-term goals, the amount you budget could be drastically different from your neighbor.
If you’re just starting Dave’s seven Baby Steps and working toward building your $1,000 emergency fund, keep your pocket money to a bare minimum. But if you’re out of debt and working toward saving for a house or retirement, you have additional wiggle room. Just make sure you’re not spoiling yourself rotten and abandoning your long-term goals in the process. Ultimately, only you know how much fun you can afford.
It’s okay to set aside some time and money for yourself each month. Even a small indulgence can do wonders for your money morale. Just be sure to set your fun allowance before the month begins and then stick with it no matter what. A healthy budget is a lot better with a little icing.
Need an easy, on-the-go way to stay on budget? Check out EveryDollar, our free budgeting app!