eli5: Why is investing in Gold considered so secure?
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Investing in gold is considered smart because it backs up the currency.
The United States and many other countries do not have their currency backed up by gold, which means it’s paper money and is intrinsically worthless. Only the word of the Federal Bank gives the US dollar value.
Gold is used to hedge against the inflation of currency, which will inevitably go up due to inflation. Inflation is caused by the nature of stocks and bonds, which are encouraged to go up to make a profit, causing the cost of goods and services to go up.
Gold is not directly tied to stocks and bonds(although some mining companies have stocks and EFTs), so many people across the world use it. Traditional families in the old world use gold as part of dowry payments to be used in hard times, for example.
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