Investors have consistently turned to gold for safety during times of global turmoil. If we study gold prices over 20 years, we can see that the demand for gold spiked at specific points in time, when the capital markets had crashed. This ‘safe haven’ driven demand sent the spot prices of gold skyrocketing at those specific junctures. Back in 2002, the price of gold registered an increase of 23.96% and the trend continued into 2003 with prices rising once again by 21.74%. Gold climbed 31.59% in 2007 as the world was pushed to the brink of recession.
The years of the great recession were 2007 to 2009. The US officially went into recession by December 2007, but the early reflections were felt through 2007, sending investors scurrying for gold. Likewise, the ripple effects were felt long after, and even now, the world has not completely recovered from the devastating effects of that recessionary period. Sure enough, gold hit a record high of $1420.25 per troy ounce during 2010 – 2011.
It may be concluded therefore that gold is simply a stop-gap cover for investors looking to hedge their risks against market uncertainties. But let’s stop for a minute and take a long hard look at gold prices again. Gold offers stability and provides steady returns for the long-term investor with a serious view and a sustainable time horizon. Prices of gold were only $369 in 1996 Through the ups and downs, gold has consistently emerged stronger, leading to a high of $1664 in 2012.
Investors need to look at gold as insurance for their portfolios and use steady returns to create a stable base for their portfolio. Those who waited were rewarded with fourfold increases in gold prices over a span of 20 years. These people were rewarded because they had stable investing habits, coupled with a long-term vision for gold. Having faith in your investments goes a long way and chalking out a timeline you can follow before cashing it in.
The world’s fair share of economic woes continue unabated and indeed, gold remains a safe haven for investors. Brexit uncertainties in Europe, the instability of the coalition and US-China trade wars are just a few reasons to stay invested in gold. The war on terror is an added factor in this toxic mix. Even if the uncertainty eases in the years to come, price trends have repeatedly shown us that gold prices have enjoyed a steady overall increase, in spite of short-term ups and downs.
At Physical Gold, setting gold investment strategies is what our investment team does best. We love to guide investors just like you on how and when to buy the precious metal. So, call us today on 020 7060 9992 or get in touch online to find out how a long-term view on gold may be just what you need in the years to come.
Image credit: Michael Steinberg
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.