Gold’s Key Attributes

27 Jan

Gold’s Key Attributes

Here is What the World Gold Council Says!

“Gold is a highly liquid asset, which is no one’s liability, carries no credit risk, and is scarce, historically preserving its value over time. It also benefits from diverse sources of demand: as an investment, a reserve asset, gold jewelry, and a technology component.”

That is a short description of gold’s leading financial attributes according the World Gold Council, and international gold industry trade association. 

Here are some of the key takeaways from its just released report Gold as a strategic asset: 2025 edition:

A long-term source of return
Gold is, on the one hand, often used as an investment to protect and enhance wealth over the long term, but on the other hand it is also a consumer good, via jewelry and technology demand. During periods of economic uncertainty, it is the counter-cyclical investment demand that drives the gold price up. During periods of economic expansion, the pro-cyclical consumer demand supports its performance.

Diversification that works
[During the Global Financial Crisis 2008-9] equities and other risk assets tumbled in value, as did hedge funds, real estate and most commodities, which were long deemed portfolio diversifiers. Gold, by contrast, held its own and increased in price, rising 21% in US dollars from December 2007 to February 2009. And in the most recent sharp equity market pullbacks of 2020 and 2022, gold’s performance remained positive.

A deep and liquid market
The gold market is large, global, and highly liquid. We estimate that physical gold holdings by investors and central banks are worth approximately US$5.1tn, with an additional US$1.0tn in open interest through derivatives traded on exchanges or the over-the- counter (OTC) market.

The gold market is also more liquid than several major financial markets, including euro/yen and the Dow Jones Industrial Average, while trading volumes are similar to those of US T-Bills.

Return, diversification, and liquidity.  For investors in today’s demanding and inflationary environment, those qualities are pure gold.

For portfolio protection or just to have gold and silver off the grid for time of uncertainty, contact Republic Monetary Exchange Phoenix today.