In many economic downturns and bear markets, gold has proven to be a haven for investors across the world, with many traders and investors choosing to invest in it to protect their capital from price depreciation, which is caused by inflation, causing Normal prices increase.
Because gold prices are related to the value of the US dollar because gold is dollar-denominated, a stronger USD keeps the price of gold further down. A weak USD pushes up the price of gold due to increased demand. Ultimately this means that when the dollar is more vulnerable, more gold can be bought, which protects investors from economic events such as currency devaluation and provides a safety net during periods of political instability.
When governments attempted to protect their economies, gold gained popularity for its ability to hedge against inflation, such as in 1879 when the US introduced a gold standard that combined the US dollar with real gold to combat inflation. began to support, and in 1971 when President Nixon decided. Eliminating the gold standard to gain better control over the gold-to-dollar conversion and improve inflation.
While the asset has become a go-to for many investors who want to hedge against inflation due to the apparent low risk of price crashes, a Duke University study found that the asset class was the most successful in combating inflation. when invested for the period. a century. It was found that short-term investments had more significant volatility that did not guarantee returns for investors.
Despite its usefulness, investors should be aware that many gold mining companies are unsuccessful due to high overhead costs, debt, finance, lack of control over commodity prices, and non-compliance. Investors looking to get involved in gold-backed cryptocurrencies sometimes fail because they cannot create or maintain commercial value.
One company trying to provide a solution to this problem is Zambesi Gold, a thriving business that aims to make the transition to mining assets as a fully backed digital asset. Self-described in its whitepaper as “real gold, backed by real people and real mining operations with real value,” the company believes that current issues in gold investing exist because companies have “a There is a lack of business planning that leads to low interest and productivity.”
To solve these problems, an agreement between Zambesi Token and its investors ensures that there will be no partial lending. “The number of tokens will be fixed to prevent inflation; therefore, the value of the token will increase regardless of the demand for the token or the price of gold, and the amount of gold backed for each token will increase every month.”
The company believes that each asset should contribute to the profitability of the business and should not subsidize other assets to reduce the cost of debt. It does so by allowing token holders to become beneficiaries of the Gold Custodian Trust. In this vault material bullion gets stored.
“The Zambesi Gold Standard is a monetary system backed by the value of physical gold, with project tokens, like gold, being fully divisible, with an estimated historical and underlying value for the future.” By implementing this structure, holders of Zambesi tokens are guaranteed that their investment in gold will always grow in volume and value.
In today’s bear market, investors are constantly looking for ways to hedge their portfolios against inflation. While gold has proven to be a haven for investors, it is still not without risk, and many investments can take a long period of time to provide returns. However, newcomers like Zambesi Gold are disrupting this space, giving investors a safer and more secure way to invest in gold using the cryptocurrency. To learn more about this exciting new project, visit Zambesi Gold’s website today.