By Frants Preis
In the constantly changing world of investments, gold has remained a reliable choice for over 5 000 years. It is not just a shiny metal – it is a long-standing store of value, offering stability during turbulent markets.
When markets become volatile, many investors turn to gold as a safe haven. Unlike paper currencies, which can lose value through inflation, or equities, which can plummet during market crashes, gold has consistently held its value throughout geopolitical upheavals and economic downturns.
Central banks worldwide hold over 35 000 tons of gold, underscoring its importance as a global asset. Gold’s low or negative correlation with traditional investments like shares and bonds makes it a valuable tool for diversifying portfolios.
It is traded 24 hours a day across major financial centres, ensuring high liquidity. In countries such as India and China, gold is deeply woven into cultural and religious practices, driving strong demand. Additionally, about 10% of annual gold demand comes from technology, particularly in electronics and medical devices, because of its excellent conductivity and resistance to tarnish.
Gold’s appeal is not limited to owning physical bars or coins. Investors can also consider gold exchange-traded notes (ETNs) and gold miner ETFs. Gold ETNs track gold prices, offering exposure to the metal without the need to store it physically.
Gold miner ETFs provide indirect exposure by investing in companies that mine gold, potentially offering higher returns if gold prices rise, due to leveraged balance sheets and experienced management teams.
So, what is the opportunity for investors today? With ongoing uncertainties, the case for investing in gold is compelling. Adding gold to your investment strategy can help protect your wealth and navigate market challenges.
In summary, gold’s value goes beyond its physical allure; it is a strategic investment.
As you plan your financial future, consider dedicating a portion of your portfolio to gold, seizing the opportunity for long-term wealth preservation and growth.
Frants Preis is the managing director of Preis Investments