deVere Investor Insight - Q1 2021

32 Investor Insight // Q1 - 2021 Before it’s industrial use was discovered, gold was used for decorative and religious objects. Gold objects dating as far back as 4000 BC have been discovered in Eastern Europe. Most likely discovered first in rivers and streams all over the world, gold was used in ancient times to make jewellery and religious idols for worship. Perhaps it was the shiny yellow colour of the nuggets or it’s rarity that made this metal an obsession to ancient civilisations. We must wonder why Cortez almost single-handedly exterminated an entire race in his pursuit of gold, or why the pirates of old pillaged and plundered for it. Or perhaps it is because gold and silver come from the stars. Gold and silver is formed in stars that explode or go supernova. Kingdoms were measured by the amount of gold trinkets and jewellery they had. But it was the Egyptians that first used gold coins in the form of the ‘Shekel’ to trade with other countries. Gold was the one thing that culturally diverse civilisations had in common. It made it easier to trade for goods they themselves did not have or produce, by using gold as a standard payment method. It was at this time that several cultures started experimenting with gold. The Babylonians discovered a method called fire assay to test the purity of gold, a method that is still used today. The Egyptians started mixing gold with other metals to change its colour. It wasn’t until around 560 BC that Asia minor started minting pure gold coins. It took around a thousand years till William the conqueror introduced a coin-based currency system in England. But it was the global gold rush in the 1800’s that officially cemented gold as the sought-after commodity, especially in Australia, South Africa and the frontiers of North America. (Perhaps the largest being the Klondike gold rush) Thousands of jobs were created and the ‘free for all’ gold mining spread wealth across these continents, subsequently boosting economies. ** In modern times, countries stockpile gold bullion as security. If markets crash, economies flounder, or banks and fiat currency are affected, gold maintains its value. It is the one stable constant for any economy, and it creates a global standard of value. “Gold is a stable commodity and adding it to your portfolio could help reduce volatility and risk during economic instability. Also, it offers inflation protection as precious metals do not carry credit risk or are affected by inflation” * The king of precious metals, gold, is durable, malleable and can conduct heat and electricity. It is used in dentistry and electronics but is mostly used in jewellery. It is also used as an alternative currency and most countries stockpile gold bars as a stable investment for their economies.