At the beginning of August gold prices reached record highs as many of the world’s leading economies plunged into recession. The UK, US, and much of Europe – including Russia – is now in recession. There are developing fears that the 2020 recession will be worse than the 2008 financial crash.
This means that gold investment is a shining beacon of hope for investors as the global economy crashes due to the effects felt from the global pandemic.
Gold is often considered a reliable store of wealth and a safe haven investment against crashing markets. Currently gold is continuing a dizzying ascent to prices we’ve never experienced before — so, exactly why are so many investors buying gold, and why should you join them?
1. Gold prices are at record highs
At the beginning of August gold prices eclipsed the $2,000 (c.£1,500) mark for the first time as investors looked for a safe haven to store their wealth as the recession hit during the global pandemic.
Commentators have long been awaiting the day when gold would top the $2,000 watershed. In late August the price fell slightly, but there is much talk of it rising again as COVID-19 wreaks havoc on global economies and other forms of investments lose value as a result.
In the US, investors continue to move cash into gold investment as COVID-19 cases continue to rise unchecked amid a poor response from the administration.
The price of gold has skyrocketed more than 30 per cent this year as the number of COVID-19 cases has risen alarmingly in the US, leading to many States to reverse or put back their plans to reopen. The UK is in a similar position with cases still rising and second lockdown periods being enforced for Manchester, Leicester, and various towns in the North of England.
International relations are also playing their part in rising prices. Growing tensions between China and the US are evident after the US-China trade and tech war intensified when President Trump banned Chinese social media apps WeChat and TikTok at the beginning of this month. Also, the much-publicised banning of Huawei from UK and US 5G networks over security concerns has played its part in the continued rising prices of gold.
Want to keep up to date with the latest gold prices? Check our live gold price tool. It’s constantly updated with spot prices taken from live feeds around the world, so you can be assured it’s up-to-date and accurate.
2. Other investment opportunities aren’t as resilient
The pandemic is having a more negative impact on other investment opportunities than what’s being observed with the yellow metal. Bond yields are trending close to zero – or negative in some countries. Because of this, more investors are turning to gold to diversify their investment portfolio, which in turn is raising the price of gold, making it a more valuable investment.
Also, with stock valuations much higher than average in the current climate, acquiring gold can be relatively affordable compared to buying stocks.
3. Gold is a safe haven asset
A safe haven asset typically holds its value during economic downturns and recessions. Other investments like stocks, which are considered riskier, tend to perform less well.
Gold bullion bars and gold coins have been coveted for thousands of years, going back to the time of the Egyptians and much further. They continue to hold their lustre today for investors, and when investors buy gold, it tends to hold its value.
Gold has historically performed well in times of crisis. For instance, gold fared well in the Great Depression, the Second World War, the 1974 Oil Price Crisis, and the 1980s recession.
Gold prices also spiked during the Soviet invasion of Afghanistan in 1979-80 and in the aftermath of the EU Referendum in 2016.
Gold is also considered to be a hedge against inflation because its price is variable. Unlike stocks, gold doesn’t derive its value from physical currency. This means the gold investor is insulated from shocks to the market, as inflation negates the value of currency, the gold price tends to rise.
If you don’t have gold assets in your portfolio, you should consider buying now as gold is a fantastic store of value. It has maintained its purchasing power for thousands of years and its value seems set to continue to break new ground as the COVID-19 pandemic develops.
4. Gold is on a long term upward trend
Gold prices have risen impressively in the last few months, and there are signs that gold will continue its upward trend. Over the last decade, the gold price has virtually doubled. This year prices have risen by over 30 per cent, as investors have rushed to protect their wealth with gold investments.
With the impact of the global recession yet to be widely felt, there will only be more value placed in gold in the coming months.
5. Gold is a tangible asset
As an actual physical asset, gold holds its value better than other forms of investment. It cannot be easily destroyed, and as a commodity, there’s only so much gold in the world – and it’s running out fast.
Gold can’t fall victim to technological failings or malicious hackings. If your bank account were to be compromised, your gold would remain the same in perpetuity.
Gold is liquid and you can sell fast
Especially during these trying times, the fact that gold is a liquid asset that’s easy and quick to sell is part of what makes the precious metal so attractive to investors.
With our secure vaulted storage option, investors can keep their gold safe, while at the same time retaining the option to sell back their gold to us at the value displayed in their online account.
Get in touch with us, we’re always at the end of the phone line, or ready to respond to your queries via email.
If you want to arrange a personal appointment to discuss your investment plans please ring ahead on 01902 623 256, we’re based in Wolverhampton.