storeofvalue

Store of value is an economic concept describing an asset that can be saved, retrieved, and exchanged in the future with a relatively stable value. It is one of the traditional functions of money, alongside serving as a medium of exchange and a unit of account. As a store of value, an asset preserves purchasing power over time, allowing individuals and institutions to defer consumption or plan for future needs.

Assets that function well as stores of value typically share characteristics such as durability, portability, divisibility, and recognizability. They are sufficiently scarce or backed by credible institutions, and they maintain liquidity so they can be exchanged for goods or other assets without large losses. The degree to which an asset preserves value depends on economic conditions, inflation, interest rates, and associated risks.

Common examples include durable physical assets like gold and real estate, as well as financial assets such as government bonds or other high-grade securities, and cash in low-inflation environments. Currency can act as a store of value when price levels are stable, though high inflation or monetary depreciation undermines that role. Some observers also regard certain digital assets, such as cryptocurrencies, as stores of value, but their long-term reliability remains a topic of debate due to price volatility and regulatory uncertainty.

Limitations to store of value include erosion of purchasing power through inflation, exposure to market and credit risk, and shifts in monetary or fiscal policy. No single asset universally serves as a perfect store of value for all investors or time horizons. Understanding the store of value function aids in asset allocation, risk management, and interpretations of monetary policy and macroeconomic stability.