For thousands of years, gold has been the best store of value, especially during times of volatility and political uncertainty. In recent years, we have seen the price of gold surging to new highs, and many people are asking: why is gold so expensive?
The short answer is that fiat currencies, like the pound sterling, are rapidly losing purchasing power, and the demand for gold, as a safe haven, is rising as a result.
But why are fiat currencies losing their value? Let’s unpack the drivers behind this shift.
Inflation and the cost of living crisis
If you’ve noticed your groceries, energy bills, and everyday costs go up in recent years, the root causes can be traced back to a series of major global events that have caused volatility in the global economy.
The first major event was the 2008 global financial crisis, in which the U.S housing bubble burst after years of irresponsible lending and risk taking by banks. The result? Governments and central banks around the world printed vast amounts of new money to bail out the banks. This kept the global financial system stable, but it also caused inflation which means more money was needed to buy the same goods and services. In other words, regular people were made poorer to cover the catastrophe caused by the banks.
Then came the COVID-19 pandemic, when economies effectively ground to a halt. The solution by governments again was to print even more new money to fund furlough schemes, stimulus packages and support programmes.
More recently we have seen geo-political tensions and even hot wars disrupt global supply chains and trigger more inflation. Russia’s invasion of Ukraine, for example, pushed up the cost of energy and food, and led to Western economies funding Ukraine’s cause through, you guessed it, more money printing.
Combine these global macroeconomic events with reckless domestic spending by successive UK governments, and it’s no wonder we find ourselves with spiralling national debt and a cost of living crisis that seems to be getting worse, not better.
How does gold fit in?
For thousands of years, gold has been used as a safe haven during times of turbulence and rampant inflation. It is the ultimate hedge against currency debasement because it can’t be printed, devalued, or defaulted on. As people start to feel their money lose purchasing power, the demand for gold rises. In fact, central banks around the world have been buying gold in record amounts too. This is a signal that the surge in gold’s value is not a short term spike, but more likely a long term trend. And like any other long term shift, the sooner you adapt, the better.
Gold’s price might feel expensive now, but when measured against the massive expansion of global money supply, gold’s upward trajectory is still very early. And looking ahead, there are many factors that could see gold’s value continue to rise in the long term.
Emerging alliances like BRICS are actively discussing a gold-backed currency. Meanwhile, the global population keeps growing, whilst new gold is becoming increasingly difficult and expensive to mine. These supply and demand dynamics suggest gold’s long-term value may still have plenty of room left to expand.
Why TallyMoney is the best way to buy gold
Whilst gold is a better store of wealth compared to holding pounds in a bank account, it’s never been as practical – until now.
Historically, holding physical gold has come with challenges. You can’t really buy things with it like you can with regular money, and it’s expensive to store and insure.
TallyMoney changes all of that. A TallyMoney account gives you gold that you can save or spend. You get all of the benefits of gold, with none of the drawbacks.
When you deposit pounds into your Tally account, they’re instantly converted into physical gold that you own outright, safely stored in a secure Swiss vault. Every 1 tally = 1 milligram of gold. Your account comes with an app that lets you manage your money, and a Tally debit card so you can spend it as you would with cash.
Buying physical gold means you need to store and insure it yourself. Buying a gold ETP (Exchange Traded Product) means you don’t actually own the gold outright. Neither option allows you to spend your wealth like you would with regular money. This is why more and more Brits are choosing TallyMoney to buy gold and preserve their wealth.
So why is gold so expensive?
The price of gold is rising because trust in fiat money is fading. As central banks print more currency and global uncertainty grows, people are flocking back to the store of wealth that has stood the test of time.
Gold’s current price isn’t a short-term trend, it’s a reflection of macro shifts in the global economy. Buying gold now could prove to be one of the smartest financial moves you make because in the greater scheme of things, it is still very early in gold’s upward trajectory.
With TallyMoney, owning gold is finally easy, secure and as liquid as the pounds in your bank account.
