Wednesday, August 3, 2011

The Monetary Asset that is Gold

Gold has been in circulation in the world currency market for a long time and remains the oldest known currency in the world. Perhaps the fact that this commodity does not tarnish, corrode or decline in value is what has made it popular. Gold is also very scarce and this has led to an increase in demand.

Gold was in use in several countries and world regions for trading purposes long before 2000 B.C. The gold coins were used and circulated from one region to another, forming the major currency basis in Europe and other parts of the world such as the Middle East and the Mediterranean. Other coins came into the picture as time went by and gold became more valuable and difficult to access for most people in order to continue with their daily transactions. The coins that came into being include the Venetian ducat, the Islamic dinar and the Byzantine bezant.

As time went by, money made out of metal was used to trade and their value was based on the value of the metal. This later transformed into paper money which is the currency that is widely used today in all parts of the world. With paper money, it was possible to get gold in exchange for it and this has been the norm until today. In this sense, the gold and other valuable commodities such as silver have become the major basis for the monetary system.

The value of gold has continued to increase with time and it is true to say that it won't fall to low rates in the near future as it becomes scarcer by the day. People and investors, on the other hand, have realized just how valuable this commodity is and the demand has increased. This is the reason why it is one of the most preferred commodities in the forex market and around the world as it adds value even in times when the economy does not favor investors.

Developed countries such as Great Britain, China and Germany can be termed the major gold valued regions as this commodity continues to be the basis of the trading systems in these regions. It is made available in specific situations and therefore it is not too difficult to get a piece of this asset to start in the profitable world of trading or just to hold it as security for the future.