Do you remember these words, “Greed… is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.”
If it still doesn’t ring a bell, these are the words of Mr. Gordon Gekko of Wall Street (1987) and even 24 years later they are still true. And probably always will be. It is greed that brought mankind to find the safest exchange currency – gold.
When all goes bad, it goes good (up). The last two years proved it. After the collapse of Lehman Brothers, when all decision makers were panicking will the financial system as we know it survive and should they bring back the golden ages, the only asset that stayed still and appreciated was gold.
Numbers speak for themselves. For the last five years there is probably no other asset whose price has doubled or triple but gold. From about $517 for a troy ounce it now is heading for $1260. So it’s only natural when you see everything else lose value including your home, which you never thought would happen, to get back to the safe heaven in investments – gold.
Basically the current crisis has proven yet for another time that gold will be one of the safest long-term investments. It may not give you 5 to 10% return every year in the next 100 years, but it will sure be an asset that will keep you wealth from disappearing.
That is for example how Turkish people measure their wealth. They do it not as much in property as in gold and golden jewelry which every young girl must have before it gets married. The more gold it gets from her husband the better she did in life. This may look a bit primitive but it clearly shows why gold is one of the safest assets ever.
So if greed has evolved as mankind has evolved it did that to teach us that apart from wanting all material and nonmaterial things that make our everyday life easier like money, cars, houses, fashion clothes and etc., we need an asset that will first safeguard our wealth and then make it worth more. Because only through gold kings and queens have managed to survive for ages, Turkish girls and boys find their best match and finally assets rarely depreciate.
Of course the only shortcoming to gold is its illiquidity. However, nowadays it is not necessary to actually hold it in your hands because there is a solution to this shortcoming – hundreds of derivative on gold that represent it. These derivatives are traded on regulated markets and one can buy and sell it as much as they want. So, in case there is a need for liquid funds, to pay for your son’s education or buy him a car, you can close some of your gold positions or borrow some money from your broker will collateral your gold futures.