Gold, often referred to as the "king of metals," has captivated humanity for centuries. Its unique status as a financial asset, with a rich interplay of historical, financial, and psychological factors, holds a strong appeal for many investors.
preservation of wealth
Gold has long stood the test of time as a guardian of wealth. Its quality as a store of value distinguishes it from conventional currencies, which are vulnerable to the erosive effects of inflation and economic fluctuations.
This is where gold's distinction as a "safe haven" asset remains resolute. In times of economic turbulence, political strife, or market volatility, astute investors seek refuge in gold.
It not only retains its value but often thrives when traditional assets, such as equities and bonds, succumb to uncertainty. On top of this, gold's low correlation with other asset classes, like equities and bonds, distinguishes it as an invaluable tool for building diversified portfolios.
Hedging against inflation
Gold has historically acted as a robust hedge against inflation. When fiat currencies lose purchasing power, gold tends to appreciate, providing protection against the erosive effects of rising prices. This is driven largely by its scarcity and intrinsic value.
In a world where central banks can create currencies at will, gold's finite supply sets it apart as a rare and valuable asset.
Other Key benefits of gold
Liquidity: Gold can be effortlessly bought and sold in various forms, including bullion, coins, and exchange-traded funds (ETFs). This liquidity offers investors ease and agility in managing their holdings.
Geopolitical Resilience: Global events and geopolitical tensions significantly influence financial markets. Gold's value often surges during periods of geopolitical turmoil, making it a strategic addition to the discerning investor's toolkit.
Psychological Appeal: Gold's allure transcends its financial attributes. It embodies opulence, tradition, and permanence. Its emotional resonance adds a unique dimension for investors who appreciate the intersection of history, culture, and finance.
Gold’s Historical performance
Over the long term, gold has proven itself as an impressive asset with competitive returns. Despite transient periods of volatility, its historical record underscores its enduring value.
The below chart from ABC Bullion highlights how strong the rise in precious metal prices has been since the turn of the century, most notably for gold price in Australian dollars, which has risen from below $500 to almost $3000 per troy ounce.
Over the past twenty years, gold prices have risen between 7.5-8.5% per annum, making it one of the best-performing assets over this time-period.
Gold and silver price in both US and Australian dollars – 1999 to 2022
Want to learn more?
The world of high-level investments can be challenging, but the case for gold is a multifaceted one. To provide some clarity, The World Gold Council recently launched a new campaign encouraging everyone to explore the potential benefits and ease of investing in gold.
Learn more about what makes gold a strategic asset, and discover how easy it is to enter the marker on The World Gold Council website.