The coronavirus pandemic has resulted in heavy losses for shares and property since February.
However Australians with cash to take a position must put it someplace, and it appears an outdated favorite is as soon as once more coming into favour in troubled instances.
Gold, which historically will increase in worth throughout crises, in April hit its highest value in eight years. And it is prepared for an additional potential resurgence this week as information got here that nearly 600,000 Australians misplaced their jobs final month.
Australian on-line gold buying and selling platform SendGold is reporting an unbelievable 648 per cent enhance in transactions because the coronavirus took maintain of the nation.
Not solely that, the common worth of transactions has surged 339 per cent throughout the identical interval.
“Individuals are persevering with to pile into gold as a result of that weak financial image goes to proceed to drive rates of interest decrease,” Blue Line Futures chief market strategist Phil Streible informed Bloomberg.
In April, demand for gold was so excessive that the Perth Mint despatched some bars over to New York Metropolis – on a airplane.
Gold seen as ‘secure haven’
Gold, as a metallic valued for its aesthetics in addition to its industrial makes use of, is perceived to be a commodity that holds its worth with out the volatility of different investments.
In good instances, actual property and shares are seen as having extra potential for capital progress.
In addition they each present common earnings within the type of lease or dividends – one thing that gold, as a lump of metallic, cannot ever present.
However in current downturns, akin to the present pandemic, international monetary disaster or the dot-com bust within the early 2000s, traders have sought gold as a ‘secure haven’.
One more reason for the recognition could also be that it is simpler for the common particular person to purchase and promote gold.
Within the outdated days, an investor needed to bodily buy gold bars and pay costly overheads to retailer them in a safe facility.
Today, there are gold market ETFs and peer-to-peer digital buying and selling markets like SendGold – that means the investor by no means has to the touch and even see a bar of gold to commerce in it.
“With SendGold, you personal the title to bodily gold. It’s yours,” states the sendGold web site.
“It isn’t an ETF. It isn’t a foreign money backed by a little bit of gold. It’s gold… You should buy or promote your gold by weight or by greenback worth any time.”
Like all funding, the worth of gold is a man-made assemble. It solely has worth when different individuals who haven’t got it need it.
However if you happen to’re assured that frightened traders will proceed to show to it in troublesome instances, it might be the place to place your cash in lieu of shares, actual property, bonds or money.
The journalist doesn’t personal any gold or gold-backed securities. Monetary recommendation ought to be sought from an expert in line with private circumstances.