What makes Gold an attractive investment?
For centuries, gold has captivated the hearts and minds of people around the world. Its rarity, beauty, and enduring value have made it a sought-after asset for both emotional and rational reasons.
As Muslims, we may feel an even stronger connection to gold, as it is mentioned in the Qur'an as a reward for those who believe and do righteous deeds in multiple instances (18:31, 22:23, 35:33).
But what is it about gold that makes it so alluring as an investment, and why has it stood the test of time as a valuable asset?
One of the primary reasons gold is so valuable is its scarcity. The world produces more steel in an hour than it has poured gold since the beginning of recorded history. To put this into perspective, if you were to gather all the gold ever mined, it would fit into a cube measuring just 22 metres on each side. This rarity contributes to its value as an asset, making it a desirable commodity for investors and collectors alike.
Gold has stood the test of time, with gold coins first struck around 550 BC and treasures containing gold dating back to 4000 BC. This longevity further adds to its credibility and appeal. While modern currencies like fiat and cryptocurrencies have emerged in recent years, gold has been cherished for millennia, a testament to its enduring value and significance in human history.
Rational Case for Investing in Gold
From a rational standpoint, gold offers several benefits as an investment. Here are some of the factors that makes gold an invaluable investment :
Gold is not directly linked to other asset classes.
This lack of correlation can provide a degree of protection during times of economic uncertainty. For instance, during the Global Financial Crisis of 2007-2009, while the S&P 500 fell by over 50%, gold's value increased by 25%. In fact, gold has shown sharp increases in roughly 3 out of every 4 recessions.
Gold is a hedge against inflation
Additionally, unlike fiat currencies, gold cannot be printed or manipulated in the same way, making it resistant to the negative impacts of inflation.
Gold has value in itself
Moreover, gold has intrinsic value, finding application across various industries. In electronics, its conductivity and resistance to corrosion make it invaluable for components in smartphones, computers, and other devices. Similarly, it's used in diagnostic tools and treatments in the medical field. Even in aerospace, gold's reflective properties make it useful in satellite technology.
These factors contribute to gold's reputation as a "safer" investment option, providing diversification and potentially reducing overall portfolio volatility.
Emotional Attachment to Gold
Beyond its religious significance, gold also holds a strong emotional and psychological appeal. It is often associated with a sense of security, wealth preservation, and legacy. The tangible nature of gold contributes to the certainty of its preservation, making it an attractive option for those looking to create a lasting legacy.
In Malaysia, gold holds a special place in the hearts of many. It is deeply ingrained in the culture, with gold jewellery and ornaments often given as gifts during weddings, birthdays, and other special occasions. In fact, Malaysia is one of the largest consumers of gold in Southeast Asia, with an estimated 50 to 100 tons of gold consumed each year.
Gold as mentioned in the Qur'an
As Muslims, we find a special connection between gold and our faith, with the mention of it in numerous places in the Qur’an as highlighted earlier.
In one part of the Qur'an, gold is acknowledged as a reward for those who believe and do good deeds, as mentioned in Surah Al-Hajj, verse 23:
إِنَّ ٱللَّهَ يُدْخِلُ ٱلَّذِينَ ءَامَنُوا۟ وَعَمِلُوا۟ ٱلصَّـٰلِحَـٰتِ جَنَّـٰتٍۢ تَجْرِى مِن تَحْتِهَا ٱلْأَنْهَـٰرُ يُحَلَّوْنَ فِيهَا مِنْ أَسَاوِرَ مِن ذَهَبٍۢ وَلُؤْلُؤًۭا ۖ وَلِبَاسُهُمْ فِيهَا حَرِيرٌۭ
"Allah will surely admit those who believe and do good into Gardens, under which rivers flow, where they will be adorned with bracelets of gold and pearls, and their clothing will be silk."
This divine association provides an additional reason for Muslims to be inclined towards gold, as it serves as a worldly example of a heavenly reward. The mention of gold in the Qur'an highlights a level of significance, further reinforcing its appeal to the faithful.
If you're considering investing in gold, Wahed offers a simple and accessible way to do so. With Wahed, you can invest in gold in just a matter of minutes, making it easy to incorporate this valuable asset into your investment strategy. Whether you're drawn to gold for its emotional, religious, or rational appeal, Wahed provides a straightforward platform to help you get started.
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As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
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