Gold is much more like a currency than a commodity. It is seen as universally valuable and because of this it was originally used to back the currency of the United States government. When the Euro was first introduced, the US economy was doing well, $1 could almost be exchanged for 1 Euro. As of July 2011, you would need almost 1.5 dollars for 1 Euro. Due to investor fears or perceived weakness of the US economy, the dollar becomes less valuable as investors want to purchase overseas holdings.

Purchasing power represents the amount of goods and services you can buy with a currency. The value of gold, in terms of the real goods and services it can buy, has remained largely stable for decades, if not centuries. Gold�s real price has endured a century characterised by sweeping change, inflation and repeated geopolitical shocks. Despite all challenges, it has retained its purchasing power. In contrast, the real value of most currencies has declined.

Gold in a portfolio is a way to take money off the investment gambling table and putting it away so you can�t lose it easily. For the protection of wealth and a small security blanket, financial advisors often recommend putting 10-20% of a given portfolio into gold or other precious metals. The thought process is this: gold will always be valuable, and if I buy gold now for however much, if the dollar falls or suffers inflation (or both), I can then exchange that gold for more dollars than I bought it for.

Historically, buying gold and silver has been an excellent way of preserving purchasing power over long periods of time. Today it takes almost the same amount of gold or silver to buy a barrel of crude oil as it did 50 years ago. This is in stark contrast to national currencies (also called fiat currencies), like the US dollar, the values of which strongly erode over time.

For centuries investors have been aware of the importance of gold as part of a well balanced portfolio. History illustrates gold is a timeless asset, not only proving to be a successful preserver of wealth, but growing gold prices and record demand has ensured it has outperformed all other forms of investment. Gold and silver are the only globally recognised currencies that cannot be created out of thin air, which makes both of them great stores of value (preservers of purchasing power) in the long-term. Unlike fiat currencies that can easily be debased, gold and silver remain the ultimate forms of money.

The last four years are the beginning of a major bull move similar to the 70's when gold moved from $38 to over $800. Central banks in several countries have stated their intent to increase their gold holdings instead of selling. That is always the underlying motive behind the questions �why buy gold?� or �why invest in gold?�. It boils down to one thing � to protect wealth.