As an investment, gold is still one of the first things people look to in times of uncertainty. It benefits from the fact that it is one of the few places to put your money that does not rely on anybody else’s ability to repay you. There is zero default risk to having gold as your investment. Investing in items such as antique coins, with a rarity and collectors value, can further reduce your exposure to normal market price movements.
Currently, future prospects for the value of gold are better than for many years, despite a near trebling in the price over the last six years. The amounts being mined have been on a downward trend since 2001, due to the low selling price prevailing for a few years at that time. As the production from the mines is inelastic, with long lead times to any significant change, production has still shown no major increase, despite the higher prices. At the same time demand has reached record levels, with over $100 billion spent on gold last year
The biggest increase in demand is in purchases of gold for investment purposes, with a 64% increase in demand in 2008 from the previous year. With expectations for the current disruption to western economies to continue for at least two years, plus the continued imbalance between growing demand and stable supply, the prospects are for an investment in gold to show positive results for some time to come. Combined with the stability that gold brings to an investment portfolio, lessening the exposure to more volatile markets, the arguments for investing in this most precious of metals are compelling.
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