Investors have found gold to be an asset in times of economic turmoil and bear markets. This is because it protects capital against inflation-related value declines.
Due to gold being US-denominated and its prices, the US dollar is what drives gold’s price down. This allows for gold to be more tightly controlled. Due to rising demand, a weaker USD will drive the gold price up. This allows investors to buy more gold when the dollar is weaker, providing protection against currency devaluation or providing security during times of political instability.
Popularity of gold as an inflation hedge was gained when governments sought to protect their economic systems. This happened in 1879 when the US instituted a gold Standard that started backing the US dollar with actual Gold. Nixon then ended the gold system in 1971 in order to better manage gold-to-dollar exchanges and to increase inflation.
The asset is a popular choice for investors looking to protect against inflation. However, a Duke University study found that it was more effective at countering inflation when held for over 100 years. The study found that investors who invested in shorter terms experienced more severe fluctuations, which did not ensure gains.
Investors should realize that gold mining is not a profitable business. This can be due to high overhead costs and debt as well as finance problems. Investors who seek to invest in gold-backed cryptocurrency often fail as they are unable to create or maintain commercial value.
Zambesi Gold is a company that hopes to solve this problem. It’s a growing business and aims to make digital mining assets fully-backed. Self-described in its whitepaper as being “backed by real gold, real people, and real mining operations combined with real value,” the company believes that current issues in gold investing exist due to companies having “a lack of a business plan which leads to less interest and productivity.”
To resolve these problems, the Zambesi Token agreed with investors so that fractional lending is not possible. “The number of tokens will be fixed, preventing inflation; therefore, a token’s value will increase irrespective of the demand for the token or of the gold price, and the amount of gold backing for each token will increase each month.”
It believes each asset should be profitable and not used to subsidise other assets in order to lower the cost of debt. This is done by making token holders the beneficiaries of Gold Custodian Trust. Physical bullion is stored in this vault.
“The Zambesi Gold standard is a monetary system backed by the value of physical gold, with the project’s token, just like gold, being perfectly divisible, with historical and inherent value projected for the future.” By implementing this structure, Zambesi token holders are guaranteed that their investment in gold will always increase in quantity and value.
In today’s bear market, investors are constantly looking for ways to hedge their portfolios against inflation. Although gold is proving to be an investment haven, there are still risks and some investments may not provide immediate returns. Newcomers such as Zambesi Gold have disrupted this market, offering investors a safer, more secure and reliable way to buy gold with cryptocurrency. To learn more about this exciting new project, head to Zambesi Gold’s website today.