Investment

Gold, unlike shares or real estate, cannot be traced (melting the bars will destroy the bar numbers), it can be sold anonymously anywhere in the world (liquidity), cannot be traced publicly, bears no address, no owner name, no purchase price, etc.

Gold is a key part of the three spokes rule. This is a unique investment rule that has never failed in centuries. There is a rumour that the richest human communities, such as China's foreign diaspora, Jews, or Armenians follow this rule. Their legendary wealth is largely based on adherence to the rule of the three spokes. And all that is needed besides is the time. These communities count on this.

How does the three spokes rule work? Imagine an imaginary wheel divided into three slices (by spokes). One spoke represents commercial instruments (money, stocks, bonds). The second spoke represents real estates and the third represents precious metals. Whoever thinks in long‑term, invests one third of his property in each spoke. One of the spokes of the fictional wheel points at twelve o'clock, the other at four in the afternoon and the third at eight o'clock in the evening. As the years run and the wheel spins, the spokes are changing each other. This brings the individual segments of the investment to the sunlight and the investor buys or sells according to the current situation. Gold is a meaningful item in every portfolio because it behaves anti‑cyclically to the US dollar and stocks, i.e. if stocks and dollar are falling, the price of gold rises and vice versa. Therefore, gold serves as a stabilizer.

Gold is a store of value and is practically independent of economic conditions. Unlike shares in companies or government bonds, gold will always maintain its value. Almost every country has experienced at least one major currency crisis in the last hundred years. Those who held a part of their property in gold survived these periods relatively well. Unfortunately, most people have seen how their many years of savings become worthless, sometimes even within a few days. However, gold remains an insurance against an inflation in turbulent or uncertain times. Compared to gold, all of the currencies are losing their purchasing power due to the constant rise in prices of goods and services. Only from 2000 to 2010 increased its price five times. Gold is also increasingly used as a hedge against the fluctuation of the USD exchange rate, which is still considered the main currency in the world. Gold and USD are the main reserve instruments of central banks. If the USD exchange rate to other currencies raises (the USD strengthens), the price of gold in USD usually decreases, and vice versa, if the USD exchange rate declines to other currencies (the USD weakens), the price of gold in USD usually increases. Therefore, gold has proved itself many times in the past as an effective protection against a weak currency in general.

Physical gold represents a real protection against inflation, adverse political influences or economic instability. The physical form of gold differs substantially from the paper one (ETF certificates, gold funds, shares funds, etc.). The paper gold is a financial asset and the investor often buys just a promise, a castle in the air. In fact, gold declared on the gold plated paper certificate does not physically exist, or the volume of gold issued in the certificates is more than the real amount of physical gold available at all. The paper investment system may not be under the control of the ordinary investor and is dependent on the decisions of bankers or politicians and financial institutions. The settlement of the paper gold is mostly in money, not in physical gold. In contrast, physical gold is tangible property without the risk of counterparty behaviour.