Gold is traditionally seen as an asset that holds its value. This means investor demand for it, and its price, tend to rise when markets are struggling. Susannah Streeter, of investment firm Hargreaves Lansdown, said: ‘’Gold has a reputation as a safe haven and a way investors can diversify risk – it acquired extra shine as equity markets turned more volatile amid rising concerns about inflation and the prospects for the global economy. “Gold investments are seen as a hedge against inflation due to its historic use as a store of value dating back thousands of years, and the relatively limited supply of the metal. As inflation has shot up, gold has risen dramatically in price.”
A key factor affecting the gold price is supply and demand and investor behavior. As markets become turbulent and interest rates increase, wary investors often head for gold as the best-
known safe haven asset, pushing up prices. Khalaf said: “Gold tends to do well when the global economy is having a tough time. It also performs well in times of dollar weakness, as the precious metal is priced in US dollars. This may well explain the recent rise in the gold price.”
For centuries, savvy investors have been aware of the importance of gold as part of a well-balanced portfolio. In addition to offering wealth diversification, gold is a world-renowned safe haven for investors, offering the ultimate insurance and protection against turbulent economic times. History illustrates that gold is a timeless asset, not only proving to be a successful preserver of wealth, but high gold prices and record demand has ensured it has outperformed many other forms of investment. Gold has remained a popular asset since the last financial crisis, when confidence in financial institutions was shaken. Just over a decade later, 2020 proved to be another unprecedented year due to the Covid-19 pandemic. The response of central banks has been unprecedented money-printing, historically low interest rates, and increasing public spending, raising national debt to new peace-time highs, and risking high levels of inflation. Gold has reached new all-time highs in the UK repeatedly since 2020 and into 2023, as the economic backdrop drives further demand for this safe haven metal. Soaring inflation has sparked a cost-of-living crisis, and seen central banks aggressively hike interest rates. Falling economic growth has raised concerns of recession to come, while inflation remains stubbornly high. Central banks and investors are driving record demand for gold as they seek safe places to keep their money, and gold is expected to rise to further records in the months to come.
In order to know if gold is a good investment, it is important to understand why people buy gold. In times of economic uncertainty and instability, buying gold makes more sense than other assets. With confidence in the banking system and worldwide economy at an all-time low, gold bullion could be the ultimate insurance and should act as an essential part of everybody’s investment portfolio. With the famous yellow metal in greater demand than ever, there are many reasons why people should buy gold. Owning gold could be the ultimate way to preserve your wealth, and possibly make a healthy return in these uncertain times. It’s an age-old question which people have been asking for centuries – where is my money really safe? And more and more people are now choosing the oldest answer: GOLD.
