Gold has been a solid, stress-free investment over time. For the last 10 years (since January of 2001), stocks have gained merely 15%, home prices have risen 25%, but Gold has gained an astounding 350% (see chart below). Who would have guessed?? No stock picking hassles, no lawn to mow. Just buy and hold!
As of May of 2011, over the past few years, Gold prices have risen to record levels. Yet, most Gold analysts who correctly predicted Gold's recent run-up and made millions for their investors, believe that the best is yet to come. Their reasoning stands on fundamental supply and demand tied to various global cues and the irresponsible handling of currencies, stocks, government debt, mortgage loans and other paper assets by governments, banks and Wall Street traders.
In fact, some top precious metals' analysts predict Gold could rise from its current price of $1,500/oz to $8,000/oz.
What's more, they don't see gold prices today as temporary bubbles that will eventually burst, but as permanent new levels based on fundamental supply and demand.
Most Americans have not yet woken up to the need to safeguard their wealth by moving away from hyperinflationary fiat money (such as our greenback) into long-term stores of value such as Gold. The purchasing power of our dollar has declined over time as a result of inflation and increase money supply.
Gold prices today could skyrocket from where they are today if the dollar were to collapse, making this a potentially great time to buy.
Many analysts believe Silver and Gold are still cheap and recommend that you accumulate physical Gold and physical Silver now because that's where you really want to be in the case of a collapse of the financial system as we know it.
Before gold, the barter system was the understood form of transacting goods. Barley was a common barter tool, as were shells, cows and human beings. It wasn't until the advent of writing, and then accounting, that the concept of a monetized system developed, which was first recorded in the civilization of Mesopotamia around 3100 B.C.
It could be that gold was used as a prototype for currency this long ago, even if actual coinage was not yet minted. Gold was first smelted by the Egyptians in 3600 B.C. The popularity of gold jewelry expanded during this time, and soon Egypt was recognized as a nation of supreme wealth.
Goldsmiths continued to perfect their craft, and the gold-rich region of Nubia produced even more gold for Egypt using new methods of extractions. In 1500 B.C., gold was recognized as a standard international medium of exchange, and Egypt's empire expanded.
Some 409 years later and five thousand miles away, China would legalize the use of small gold squares as a type of money.
The shekel is one of the first known coins to contain gold, although it was not minted with refined gold. Introduced in 1500 B.C., the shekel contained naturally occurring gold and silver alloy called electrum.
The kingdom of Lydia (in modern-day Turkey) was the first to mint gold coins for use as currency nearly a century later in 564 B.C.
"Croesids," as the coins were called, were more than just polished gold nuggets. King Croesus so improved refining techniques by this time he could strike coins that contained uniform amounts of gold. They succeeded in popularity and became a respected unit of currency throughout the region.
These coins were even used across borders, thereby making Croesids the first known and recorded international minted currency.
Lydia was soon overthrown by the Persians, which were in turn defeated by Alexander the Great in one of the largest military conquests in history. Rome was on the rise across all of Europe and a good portion of Asia, and the practice of issuing coinage grew with it.
In 50 B.C., Rome issued a gold coin called an aureus. It also marked a time when Rome initiated a law accepting only gold or silver as tax payment, which helped usher in the concept of gold as a standard form of currency.
The Roman Empire lasted for almost 500 years, and its fall allowed a marked growth and variation in gold coinage. Gold prices today and throughout history have always been effected by war and unrest.
The United Kingdom, somewhat removed from the matters of the mainland, was busy attending to the effects of the Norman Conquest. By 1066, a metallic currency standard was reintroduced to Great Britain. It would be some time, though, before a gold sovereign is introduced.
As it happened both Great Britain and Venice issued gold coins at the same time, in 1284, that revolutionized the way people thought about gold and gold coinage. The British florin (followed by the noble, angel, crown and guinea) and the Venetian ducat set the stage for advanced monetary systems based on gold and silver.
The first gold U.S. coin was struck in 1787, and the Coinage Act was passed five years later in 1792, opening the door for a bimetallic gold/silver standard in the U.S. Soon after, in a period running from 1817 to 1900, the gold standard was embraced by several countries, including the U.S. and Great Britain.
During this time gold and other forms of currency were equally exchangeable, but that would only last until 1913, when the Federal Reserve stipulated that its notes were backed only by 40% gold. By 1919, the gold standard was suspended in the face of World War I, which would prove to be the death knell for gold-backed currency, despite a few short-lived revivals.
Today currency is only backed by "the full faith and credit" of the federal government in the U.S., which reflects the global trend to abandon the gold standard.
Gold bullion coins are still considered legal tender in several of those countries that produce them, though, but now gold has much higher value in currency than its legal tender. A one-ounce $50 gold piece can now buy nearly $1,400 worth of goods, if traded for paper currency. As fiat money supplies continue to grow and expand, it is very probable that gold prices today will seem cheap in the future.