American Bullion is proud to announce the winner of the 2022 Annual Scholarship Essay Program! If you are considering entering or wondering how to win a scholarship of your own, read the essay below to learn more. Winners are selected from qualified entrants each year, and the entry of a winning student can help you learn how to get a scholarship of your own.
A college scholarship of $1,000 has been awarded. Well over 1000 applications were received in total and the talented student below was awarded a scholarship worth $1,000. Applicants were asked to write an essay answering the question, “Large Gold Reserves Equal Economic Security” Participating students offered a wide range of viewpoints, each with its own approach and opinion. American Bullion is proud to award this scholarship to the deserving student below. The 2022 winner is:
Anthony Pascual – Cal Poly Pomna, CA.
Nevtan Akcora, Co-Founder and President of American Bullion said, “I am very happy to see the number of applicants to our annual scholarship contest continue to increase each year. And I am very excited to see that so many millennials understand the importance and potential of alternative investments, such as gold and other physical precious metals. Again, I’d like to thank all of the participants for their submissions in this year’s competition and wish the best for all in their academic endeavors and beyond.”
Winners’ Thoughts & Essay
I want to sincerely thank American Bullion for this scholarship opportunity and finding value in sponsoring higher level education. In a rapidly changing world where a variety of volatile digital currencies are becoming more prevalent, investments like gold or silver are a wiser and safer choice with limited risks involved. That being said, I am very proud to say that I just completed my last semester at California State Polytechnic University, Pomona for my Bachelor of Science in Chemical Engineering with a Minor in Materials Science Engineering. I’m looking forward to the next chapter in my life working in industry!
Essay:“Large Gold Reserves Equal Economic Security”
To understand why world central banks trust gold, one must first understand the main function of central banks in any country. Central banks are the key to ensuring the financial stability of the county and ensuring the economy stays afloat even in times of crisis. Economic crises may arise from issues like high inflation, high unemployment, and market crashes. In preparation for these situations, a central bank must maintain a good monetary policy to regulate commercial banks and maintain a monetary reserve. The central bank also has the authority to print money and control how much paper money or “fiat currency” enters the country’s economy. All these measures mitigate the chances of the banking system of the country becoming unstable and prevent it from falling.
Fiat currency is money that has value through the value placed on it by a government. In plain terms, these are the bank notes we use on a daily basis. The face value of a banknote may be 100 U.S. Dollars; however, the actual value of the paper is much less, and this value is not redeemable in valuable metals such as gold or silver. Gold has a unique advantage as an investment. Gold has virtually no liabilities attached to it whatsoever. When there are recessions, investors tend to gravitate towards gold, thereby increasing its market value. Central banks purchase and keep a decent reserve of gold to protect themselves in times of economic crises or against a weakening U.S. dollar [USD], which is the world’s most common reserve currency.
As a recent example, due to a volatile state in the global market caused by the shock of the Ukraine War and the pandemic, central banks across the world have been increasing their gold reserves. According to the World Gold Council, during the first half of 2022, central banks have added over a net of 35 tonnes of gold to the world’s reserves. Due to the war, Russia’s central bank reserves of USD have been frozen—which is an indication to many countries how depending on USD reserves can be a risk in modern times. The fragile, harmonious co-existence that had been maintained within the world’s top economies after the Second World War is beginning to fray, and so non-U.S.-friendly countries will choose to diversify their assets with gold rather than USD to hedge against this risky financial environment.
Thus, if a country has a large reserve of gold, it can be a sign of a secure financial system, and ensure the country recovers well after a system collapse. In general, if the value of the USD falls, the value of gold will usually rise, and so they share an inverse relationship. Interestingly, the U.S. currently holds the world’s largest gold reserve at over 8 thousand tonnes, which is more than double the amount of the second largest reserve held by Germany at 3,358 tonnes.
The value of a country’s currency can fluctuate because central banks may have to print more (or less) money depending on the valuation of their currency. Printing more money increases its supply and decreases its value. Because of this, a more reliable way to secure a monetary reserve is to buy up gold, which is a finite resource, and cannot be increased and decreased at will. And as previously noted, gold can stave off the risk of inflation devaluing the U.S. dollar as well, since gold values will generally increase in such a situation.
For all these reasons, world central banks trust gold more than print money, like U.S. Dollars. In a world of divisive politics and war, states are no longer in full agreement with the stability of the U.S. dollar as they were after the Second World War. Gold, on the other hand, is a precious metal which has retained its value since ancient times and predictably, will continue to do so well into the future. It is a valuable commodity with virtually no liability attached to it—and can protect a state against the risks of inflation and market volatility. That is why central banks trust gold over all other forms of investment.
The views and opinions expressed in the above essays are those of the authors and do not necessarily reflect the views of American Bullion, Inc., its affiliates, or its employees. American Bullion does not guarantee the information’s accuracy or completeness, and does not recommend that the information serve as the basis of any investment decision.
Although the information in this commentary has been obtained from sources believed to be reliable, American Bullion does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. American Bullion will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.