“When we have gold we are in fear, when we have none we are in danger” English Proverb
Gold as a safe
haven
Gold is one of few
financial assets that is not matched by a liability or debt, whose value is not
dependent on the performance of governments or corporations. In unsettled
times, it becomes a safe haven.
Recent
examples of this safe haven status can be seen during the stock market crash of
1987, the 2001 terrorist attacks in New York, and the first quarter of 2002
with Japanese investors buying gold, as they awaited the withdrawal of
government guarantees on bank deposits. In an uncertain world, it pays to hold
gold.
Gold as a hedge
A country's
currency can be printed endlessly leading to inflation and reduced value. Gold
cannot be. The gold supply is limited to the amount refined per year, and so is
not subject to the same inflationary pressures. Consequently, in times of
inflation or falling currency values, gold acts as the ultimate hedge for the
markets.
Gold is virtually indestructible
Gold can’t be
destroyed, neither by fire, nor by maltreatment, nor by wars. It is this
property that allows gold to be stored, saved and used as a form of currency in
times of financial instability, with the confidence it affords.
Gold is widely used in modern industry
Gold has not only a
monetary side but is also used in a variety of industries such as dental,
jewellery, avionics and electronics to name but a few. These industries always
need to buy gold, providing a minimum stable level of demand.
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