The 2020s have been a bit of a bad time for most people. There have been climate disasters, extreme weather events, a global pandemic, and mass inflation and price gorging across the globe.
This is bad for almost every section of society, but it is particularly bad for the stock market and finance sectors.
Every single product in these sectors has been falling in value at a tremendous rate, and many people are worried that they will not return to normal or that they will not be able to invest anymore.
As such, many people are returning to the original items that were once highly valued, especially gold.
But is gold worth buying into in 2022? In this article, we seek to answer this question for you.
Is Gold Worth Buying In 2022?
When you look at the history of stocks, gold doesn’t always have the best track record. Part of the reason for this is that nations attached their wealth to gold prices, which meant that when gold values dropped, so too did currency values.
However, since we don’t do this today, we should take an objective look at gold and honestly, there is a reason it is called the king of metals.
The value of gold has been rising in the last 5 years, with it going from $1275 in 2018 to up to $2000 in 2020. At the moment, gold sits just above $1700, which is a bit of a drop and is due to a lack of rallying in 2021.
This shouldn’t stop you buying gold though, as currently we are experiencing economic downturns and inflation, which gold can guard against very well.
Most firms and investment specialists are actually quite bullish about gold in general and are continuing to tell people to make up to 10% of their portfolios with the metal.
As such, you should buy gold if you can, especially as it took a dip in 2021. It will more than likely rally by the end of 2022 and become a better stock than ever.
Why Is Gold So Highly Valued?
Realistically, the value of gold comes from two areas: scarcity and social constructs. We will start with the first, gold is one of the rarest metals on the planet.
There are many theories about where it comes from, with the most common being that it is formed in supernovas or when neutron stars collide.
Since most gold that was in the earth sank to its core during its first forming (due to the earth being molten), almost all gold is hypothesized to have come from asteroids.
Since asteroids are rare, this makes gold very rare and due to its malleable properties, resistance to acid, and beauty, many people value it.
This brings us to the second point. Due to cultures throughout time valuing gold, we value gold as a society.
It is the metal we associate with beauty, wealth, and gift giving, as such gold is a status symbol that people will save for and buy, no matter how poor or rich they are.
These two aspects of gold mean that while it may lose value, it will probably never not be highly valued and will remain a fairly steady investment in times of crisis.
Why Did Gold Not Rally In 2021?
2021 was a bad year for investment and stock trading, which shouldn’t surprise anyone, the world was having a terrible year at that point in time.
However, given that gold tends to perform better in crises when inflation is high, it should have been a fairly good year for gold. So why didn’t it rally?
The biggest reason was the downplaying of inflation by the Fed (Federal Reserve). Now, for the record, the Fed is there to keep markets going and to try and keep everything running smoothly, but they really misjudged this one.
Eventually, they were forced to admit that this inflation was not transitory and this inflation was a real threat to the market.
Since gold becomes more highly valued in inflated markets and most people thought the 2021 inflation would disappear, gold’s value did not rise as it should have.
The other things that slowed gold’s value rise was cryptocurrency and the idea of making a lot of money from it.
In 2020, Bitcoin exploded in value and people thought this might happen again in 2021. This is seen to have distracted people from precious metal rally’s throughout the year, and gold suffered as a result.
The final thing that contributed to a lack of rises in gold stocks was the low price of other stocks.
People saw many stocks to be a fraction of the price that they were and tried to buy into them. Of course, as the economic downturn got worse, so did these stocks and people no longer had the money to invest in precious metals, like gold.
Are Precious Metals A Good Investment In General?
Absolutely, if you are feeling worried about other investments or need to save for the future, then precious metals are the way to go about it. Many people think that they are only used for jewelry or other accessories.
This is not the case and in the modern day there are many important parts of our society that precious metals are used for.
Some are used in software and hardware technologies with smartphones especially needing them to make them work properly, others are used for manufacturing purposes.
Without precious metals, our society would cease to function properly, as such it is always worth purchasing a steady supply, if you can.
Gold is definitely worth buying in 2022, not only as a safeguard against the economic downturn, but just as a safe product to buy in general.
It can be used for long term saving and, unlike other investments, it is highly unlikely to suffer from significant losses. In fact, it is predicted to rally towards the end of the year.