When investing in a commodity or market, it pays to know about the factors that lead to the appreciation and appreciation of that particular asset. Gold is known as an appreciating asset because its value goes up with time. It is a worthwhile investment because a lot of people will be willing to pay a lot of money to own a piece of it. A depreciating asset becomes less valuable, usable, or desirable over time.
A good example of a depreciating asset is your cellphone or laptop. Manufacturers develop faster and mower powerful processors faster. These are mass-produced and the fact that they are easy and cheap to manufacture means that new cellphone and laptop models that perform better are manufactured faster. This brings their price down. Hardware has to evolve quicker than software that is run on these devices, so your cellphone or laptop is a depreciating asset. If you have the latest iPhone, you know that Apple will be unveiling a new and better one. Your phone will be worth far less than its sticker price in two to four years. Cars are notorious for being rapidly depreciating assets. Your car loses its value the moment you drive it out of the lot.
Does gold depreciate?
When you have gold such a gold jewellery to sell you will realise that you really cannot sell it for the same price that you bought it for, this is due to the jewellers profit which you can’t get back. Even the highest paying gold buyers can only pay you the bullion or melt value of your gold jewellery. When you look at the international markets, you’ll notice that the trends go up and down. The value of gold might fluctuate but the yellow metal does not depreciate and is not relevant to what you paid for the jewellers profit.
Most commodities you will purchase like machinery, electronics will decline and probably have a depreciation schedule. However, gold does not have a depreciation schedule because its lifespan is pretty much unlimited. You can still find a lot of gold items that go back centuries in museums and antique auctions. If you bought a 1 oz. Gold bullion bar 5 years ago, it will still look as shiny and beautiful as the day you bought it and it might even be worth more than what you initially paid for it. Five years ago, the price of gold was $1,125.71 and today it sits at $1,798.90 that’s a 58.32% jump.
Why is it impossible for gold to depreciate?
The value of gold bullion with a fineness of .999 or 24 K is almost incapable of depreciating. There are several reasons for this: It is not affected by oxidation and will therefore not get rusty or corrode. Not many metals can truly say they are corrosion resistant.
Gold is rare. Unlike a lot of other precious metals like platinum, osmium, or palladium gold is soft and malleable. It has excellent thermal and electrical conductivity which makes it very useful in a lot of industrial applications. Approximately 37% of the gold produced annually is used in the electronics, aerospace, and machinery industries. The same phone you use contains 0.034 grams of gold used in the creation of their central processing units (CPUs).
Fifty percent of gold goes into the jewellery market. This increases on an annual basis. It is estimated that by 2026 the demand for gold in the jewellery industry will be worth $500 billion. Because of this when you have gold to sell, make sure you understand the factors that push the price of gold up and work on finding the highest paying gold buyers.
Gold is a symbol of wealth and countries that accumulate gold is regarded as wealthy and powerful nations this is why central banks have not relented in buying gold even at the worst economic and political times. When all is said and done, gold is the most dependable investment asset in the world.