Why buy gold in times of crisis
Gold jewelry: a precious investment We have already discussed how a gold jewel is perceived by those who buy it and those who receive it as something precious. Nothing could be truer! There is no better purchase one can make, especially in times of economic instability. Renowned economists maintain that investing in gold is still a more than valid option: despite market fluctuations, it performs well in times of crisis and continues to be a solid store of value over time. In this article, we will try to understand together the reasons that make gold the ultimate safe haven!
What is causing market instability?
We live in a world where the global geopolitical situation has a decisive influence on market trends. We come from a particularly turbulent 2017 in which the election of Donald Trump as President of the United States and the nuclear threats from North Korean leader Kim Jong-un greatly unsettled the global economic arrangements, prompting central banks to progressively raise interest rates in response. This instability has continued into 2018, a year in which there have also been speculations about trade wars and in which the conditions for the United Kingdom’s exit from the EU are being defined. All this only increases the risks for the gold price, which is very sensitive to global market fluctuations. Despite this, consumers continue to buy gold jewelry and even those who invest in safe-haven assets tend to purchase coins and bars which they keep in special vaults.
It is a common belief among economists that holding part of one’s capital in gold is the wisest choice to make.
Why continue to invest in gold?
First of all, there are no infinite reserves because, as with all metals, it is extracted from reserves in the earth’s crust, so in a few millennia the supplies are destined to run out. This means that its value, net of fluctuations, is destined to increase over time also due to the fact that demand continues to grow: emerging countries especially require it significantly, contributing to a steady rise in its value. Gold is a metal that resists the action of the elements, it does not change, it endures over time. In short, gold is as it appears. This undoubtedly conveys the security of a lasting investment, but above all a transparent one; stocks, bonds, real estate and the like are all closely tied to the market, whereas gold moves in its own sphere, although as already noted it is also affected by economic and political changes. However, its preciousness remains tangible. It may seem strange, but when the trust of citizens in politics, specifically in national and international governments, reaches historic lows, it is at that moment that the price of gold rises with an inverse proportional relationship. A direct proportional relationship has always linked the price of gold and inflation. That is, when the cost of living rose, so did the price of the most precious metal. Recently, however, following the latest economic strategies of the Fed, it seems the situation is changing. We can only watch how things evolve because right now it is too soon to say if this circumstance will change matters. The fact remains that historically, when things go badly, even in the most extreme case of disasters, gold remains the preferred safe haven asset also as a means of exchange. The most recent example in history is the Bretton Woods Agreements where gold was used to give new life to the currency market.
Trust an expert In conclusion, despite the fluctuation of its price, gold is the only safe haven asset along with diamonds to maintain a secure value over time. The worst that can happen is to make less on part of the invested capital if it is resold at a lower price than when it was bought; however, simply relying on an expert can avoid this inconvenience. At Ferro Gioielli you will find qualified professionals in the safe-haven asset sector. Come visit us to find out the daily gold price, whether the period is favourable, and buy your gold with peace of mind.
