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Why Gold Continues to Be a Safe Haven in Finance

I remember reading an article in YM when I was a kid about skin tone. People had either warm or cool undertones and depending on that, should wear either gold or silver jewelry. I have a warm skin undertone and to this day I wear mostly gold jewelry. So, well done YM, you've influenced my entire life.

This CNN Money video, "Why gold is considered an investing safe haven," is more about the history of the worth of gold than my jewelry proclivities, but it's interesting nonetheless. Gold has been important to pretty much every culture for the last thousand years. It's even become a barometer for the world's financial markets.

The video states that gold's value "Stems from it's rarity" and that "All the gold mined over the course of civilization wouldn't fill four Olympic-sized swimming pools." The link between gold and currency began with the creation of the first gold coin, in what is now Turkey, in 550 B.C.

In the 19th century, the video states, "Currencies around the world were fixed to gold. That lasted until 1971, when President Nixon announced the U.S. would no longer exchange dollars for gold at a set price."

investing in gold

In recessions, gold is still a barometer for investors. The value of gold often goes up when the market goes down. In 2011 the value of gold peaked at $1,900 per ounce. As the video says, gold becomes a "safe haven."

That being said, the value of gold is not immune to the harsh realities of the world. "A slow-down in China has pulled prices down, and gold's usefulness is limited," the video says. "It's primary purpose today is jewelry."

Full circle! Finally, someone has connected the world's financial markets to my jewelry box.

Bonus info: If you're interested in investing in gold, check out Money Week's Investing in Gold topic. They have articles on pretty much every aspect of investing in gold, including how to buy gold bullion.