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During times of high inflation, investors are looking for ways to counteract the universally high cost of living. As a safe haven against inflation, geopolitical uncertainties and complicated governmental policy, gold’s allure is stronger than ever, especially for investors searching for a reliable investment.
This economic uncertainty means that gold is becoming a popular investment as we continue into 2024. Here are just some of the reasons why gold is so popular.
1. It’s accessible
Gold comes in numerous forms – many of which are accessible – including jewellery, coins, bars and gold-linked financial instruments like the ETFs offered by companies like Tradu.
Each type of gold investment has its unique advantages, catering to different financial needs and investment sizes. Whether you’re a small-scale investor or are well-versed in gold trading, gold is a versatile and accessible investment meaning most people will benefit from adding gold to their portfolio.
2. It’s a safe haven asset
Gold is often seen as a safe haven asset. This means that it’s good at retaining its value, even in times of geopolitical instability and economic uncertainty. Investors usually flock to gold during times of crisis to protect themselves from inflation, market volatility and currency devaluation.
3. Central Bank purchases keep gold desirable
Central Bank activity also plays a significant role in the gold market. 2023 saw robust buying from global Central Banks, with significant purchases driving demand and impacting gold prices positively. For example, continued bank purchases from Chinese, Turkish and Indian Central Banks continue to underpin gold’s strength as a preferred reserve.
4. Strong historical performance
Historically, gold has been a great-performing asset. Since records began, humans have traded gold and its purchasing power can still be seen today.
In 2023, gold prices reached an all-time high, reflecting strong investor confidence and market dynamics. Despite some small dips in price, many forecasts predict that gold will continue to be a strong-performing asset with peaks set to occur in 2025.
5. Portfolio diversification
When it comes to investing, having a diverse portfolio is preferred as it protects your wealth against risk. For many people who tend to invest in stocks and shares, having gold is a good risk management strategy. As gold usually has a negative correlation to stocks and other financial instruments, if the stock market crashes, gold will usually hold its value.
Final thoughts
For investors, gold is a strategic financial instrument that should be a portfolio staple. Although it can be volatile at times, its accessibility, safe-haven status, central bank interest and strong historical performance confirm that it’s a worthwhile investment in 2024 and beyond.
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