We’ve all heard the saying that gold is a good safe haven asset. It protects your wealth during harsh and uncertain economic times. However, it is also a solid choice when deciding where to park your money in case you need to permanently and swiftly uproot yourself or your family.
You might be wondering what I am talking about. After all, Singapore is one of the safest countries in the world. And I won’t blame you.
You see, the short story I’m about to share is about a man from Argentina. He had enough of the rampant inflation spiralling out of control in 1990 that he took his family and left for America with only a few gold bars in his pocket.
He pawned his gold bars and started an Argentinian restaurant in the US, where the family worked in till today. He still keeps some of his wealth tucked away in gold as he recalls the horrors of the over 20,000% inflation destroying almost everything the family worked so hard to achieve.
That being said, gold is often seen as an asset that can be used to bring your wealth with you if you need to relocate urgently. We shall term this the runaway metal – the metal you turn to when you need to run away from your location with everything.
The main reason gold is being seen as a runaway metal is that the value to size ratio is high. Migrating was a tough decision back then when they did not have international movers like we do now. Even if they had, migrating from a dysfunctional country would entail too much risk to leave to a mover. By hand was usually preferred method. Hence the need for a space-efficient way of transporting wealth.
Cryptocurrency did not exist back then, hence the best option was gold. Gold price back in 1990 was hovering just under 400 USD pre Troy ounce. However, 400 USD back then was a significant amount of money. For lower income families in third-world countries, it may well be a year’s income. That made having at least 1 bar equivalent of having a year’s worth of buffer to settle in the new place.
Compare that to silver, which was around 5 USD per Troy ounce. It would take roughly 80 bars to make up the same value. While silver is more divisible and more easily exchanged for daily necessities should the need arises, having the bulk of your assets stored in silver meant needing a vehicle to move around.
Even now, with cryptocurrency in its infancy, gold offers more stability of wealth over a prolonged period. It can be accumulated over time with less risk of being wiped out, as has been seen with certain cryptocurrencies in the last 2 years. We all know that gold has withstood the test of time. Parents tell that to their kids, and the process repeats over time and space. Every country recognises the value of gold. It is simply easier to find a shop to pawn gold than a shop to exchange cryptocurrency for cash.
However, as always, we should carefully consider our personal investment goals and risk tolerance before investing in any precious metal. Precious metals can be highly volatile, and investing in physical metal can require significant capital. As with any investment, it’s important to do your research and seek the advice of a financial professional before making any investment decisions.
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