Where is the gold heading?

Team Veye | 18 May 2020

Where is the gold heading?

There is a very old saying that don’t buy gold to make money. Buy it to protect the money you already have.

Generally speaking, gold has always maintained its value over the long term. As a hedge against inflation and erosion of major currencies, it has always served the purpose.

As per a survey, 29% of retail investors have never bought gold in the past but are open to the idea of buying gold in the future. The attitude of retail investors towards gold as an asset is changing. Many have also started seeing this as a significant opportunity in a growing market.

Gold prices tend to increase more rapidly in times of crisis. Globally, investors view gold as a safe haven just the way they treat US government bonds.

Gold acts as an effective portfolio diversifier besides being a shield against inflation and a lender of last resort during economic uncertainties.

In the past decade, there has been a decline in major gold discoveries. This has made the project pipeline increasingly short of large high quality assets as explorers have focused on known deposits. Some mining companies are even undertaking systematic exploration in mines closed many years ago.

Gold occupies a unique place on the financial balance sheet. Gold is both a liquid, counter-cyclical asset and a long-term store of value. As it does not rely on the performance of another party, this unique asset is used as a final arbiter of value.

More and more nations and central banks hold large amounts of gold. Funds and institutions are also moving to it as an offset against other trading strategies.

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