Gold has been around since pretty much the dawn of civilization and can be traced back to even the most ancient of societies. But in between all the historical fact and mystery there have been a number of harmful myths surrounding this precious metal.
So in the spirit of solid gold facts, let’s examine some of these myths and debunk them once and for all, to bring the necessary appeal back to the world of precious metals. So if you’ve been spreading any of these nasty little rumours, have a read through this article and let’s combat these myths together.
- Myth number one: The Government Confiscated Gold during the 1930s.
I must confessed I have long believed this one, but only because I’m a conspiracy theorist at heart. It is true that in the 1930’s President Franklin Delano Roosevelt’s Executive Order 6102 which ordered against the hoarding of gold bullion. By this act people were encouraged to swap out their gold for cash, which became a representative of legal tender instead of the amount of gold one was entitled to. However, at no point was any of the gold confiscated from safety deposits, as the general consensus seems to think. The act did not in fact give the government any power to raid these deposits, and as it stated, did not make the owning of gold illegal, it just discouraged the hording of it.
- Myth number two: Mining Stocks Are Better Investments Than Bullion
This one largely depends on the investment and the state and value of gold at the time you consider it. Mining stocks are not as secure an investment as you would imagine. Senior company investments may offer some degree of security since the companies are well established, but the price of shares is very high and you would only see a return of roughly 4.5% every five years, if everything goes according to plan. Investing in junior companies can be done far cheaper, and may even yield higher returns, but there is also a substantial risk that you could simply lose every cent of your investment. Investing in gold on the other hand is almost always a secure bet, sure the returns are slow… very slow, but the chances of you losing lots of money are pretty slim.
- Myth number three: Gold Is a Relic
Gold has been considered a valuable asset since the dawn of just about every society, it is old… very old, but it is no relic. In fact it is as much of a relic as water or air is. That is to say that it has always been there, but to call something a relic is to dub it outdated, archaic, obsolete. The idea that gold no longer has a place in society is just absurd. It still forms the core measurement of trade since most currencies are just a representation of the availability of precious materials, and even as jewellery, it is a timeless classic which has, and still will stand strong in the test of ages.
- Myth number four: Gold Is a Commodity
This myth is understandable, albeit misleading. To call something a commodity implies that it is traded independently from a currency, and the fact is, that no matter how you slice it, gold is actually a currency and it has been used as such for hundreds of years. Okay sure, you’re not going to pay for a burger and chips with a bar of gold bullion, but then try pay for the same thing in any other currency other than the one you use in your own country. Every note or coin in circulation is a representative of the reserve bank’s gold stores, which means that aside from being an item of adornment, gold is (unlike oil, copper, nickel and silver) essentially a currency; and it can therefore be traded as such.
These kinds of myths are the sorts that discourage investment in gold, which is obviously not too great for the market. So next time the drunkard opposite you at a party starts sprouting rhetoric about the lack of value and misrepresentation of this shining asset, you be sure to correct them.