With all the craze surrounding gold over the last few years, it’s probably a good idea to remind everyone, especially the younger generation, about gold’s beginnings. For me, just the mere mention of the word “gold” conjures up the likes of Croesus, the wealthy Lydian king who reigned from 500-547 BC. The Lydian’s, during this time, are believed to be the first people to mint gold coins. As far as a pop culture reference, gold often reminds me of Goldfinger, the antagonist in the 1964 James Bond movie, who was planning to attack the gold depository at Fort Knox.

Whatever association or reference you have with gold, we all share the same envy for the highly valuable and greatly sought-after metal.

So, Where’s The Gold?

Most of the gold is held in reserves by central banks around the world. It was used and still is in many countries, to secure the value of their currency. It is estimated that all the gold mined by the end of 2011 totaled over 170,000 metric tons. As of July 31, 2015, the Treasury Bureau of the Fiscal Service published that the book value of U.S. Treasury-owned gold exceeds $11 billion dollars.

Most of the gold in the U.S. is held at Fort Knox, KY. To put this in perspective, not withstanding what Goldfinger thought, if the U.S. sold off its entire gold reserve position at a current market price, it would only be able to pay off about 3 percent of our national debt. In order to cover the whole debt, the gold price would have to be approaching a market value of around $63,000 per troy ounce!

Gold floats at a dollar valued market price. As of the writing of this article, it had recently closed at $1,146 per troy ounce. When people get nervous about the economy, there is often a flight into gold. As a result of the recent recession, gold hit an all-time high of $1,900 an ounce in 2011. There are other reasons to buy gold, but the main one is that it is considered a safe haven to protect investors against a possible catastrophe in the economic markets.

A 2014 article in USA Today reported that the U.S. holds the most gold, over 8,000 metric tons, with Germany at second place with over 3,000 metric tons and Italy running third, at nearly 2,500 metric tons. By the way, China is supposed to hold approximately 1,000 metric tons.

Gold has been the primary accepted tangible asset used as money for thousands of years. It is real, scarce, cannot be artificially reproduced (even today) and it has an agreed upon inherent value that has stood the test of time more than any other form of currency. It can be physically held and traded. It is a tangible fiat currency that can’t be created or hacked into like our latest Bitcoin, fabricated fiat currency. The demand remains as high today as it was thousands of years ago. Consider a quote from the founder of renowned Wall Street firm, E.F. Hutton & Co, Gerald M. Loeb, who once said, “The desire for gold is the most universal and deeply rooted commercial instinct of the human race.”

Our money used to be redeemable for gold and silver; however, in 1934, Congress amended the Federal Reserve Act to read, ”The said (Federal Reserve notes shall be the obligations of the United States…” Our currency was backed by gold until President Nixon ended the tie between the dollar and gold in 1971.

Bars/Bullion/Coins

“Gold bars are what most people think of when they consider gold bullion, and with good reason. Gold bars come in many different shapes and sizes. Starting off at 1 gram, gold bars can be as large as you can possibly imagine. The most commonly traded bars fall into the 1 oz. and lower range, with many different varieties available. Gold bars are a primary choice (for investors) because they offer the most pure, real gold per dollar,” according to JM Bullion.

Is Gold A Good Investment?

If you are dying to own something that is volatile and reactive to world markets and economic scares, pays no interest, no dividends, and realistically can go without going up in value, sure… go for it! I’m being facetious, but crisis causes a surge of gold buying, although I’m not sure that is the best decision.

Those of us, who lived through power outages and gasoline shortages after Hurricane Sandy, know that gold wouldn’t have helped. Although people flock to gold in times of crisis, if a real crisis occurs, I have my doubts as to how effective a stockpile of gold would prove to be. If you stockpile gold somewhere safe, and a crisis occurs, how are you going to use your gold to provide useful goods and services? Do you think people are going to start pulling out their kitchen scales, weighing gold and trading it for eggs and chickens? If a real crisis occurs there are numerous things I’d rather own than gold; things like batteries, guns solar panels, chickens, a garden and oil and gasoline,” notes Dana Anspach, in an article she wrote for About.com. I lived through 14 days of the aftermath of Hurricane Sandy. We had no power and our gasoline supply began to come under pressure. The long gas lines and falling temperatures made tempers rise. Gold wouldn’t have made a difference.

When you are having the “gold” or “no gold” discussion with your next generation, here is my take on it: It is fine to have some gold in your balanced portfolio. I don’t like to see more than a 10 percent holding in gold.

There are numerous studies and articles, which show the inverse reaction of gold prices to a stock market crash. So, this 10 percent holding is somewhat of a hedge. This is intuitive. When the market crash happens, money flows from the stock market into gold and when it is over, the money flows back into the stock market. Stay the course and, if you have the stomach for it, as your 10 percent gold holding increases, sell it and buy the low valued stocks.

The major point is not to panic when the market reacts to this situation. Do not get caught up in the doom and gloom syndrome, where people firmly believe that this tangible asset of gold that you can hold in your hand is far above the promises of our politicians and the unbacked paper issued by our governments.