Why People Buy Gold in Tough Political and Economic Times

Author: Ian Davis - Chief Operations Officer

Published: 14 Nov 2018

Last Updated: 8 Jan 2023


Gold is often viewed as a safe haven asset, a reliable store of value that can withstand economic downturns or political instability. While there are practical considerations and potential drawbacks to investing in gold, it can provide a sense of security and stability in times of uncertainty.

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The Appeal of Gold in Times of Uncertainty

Gold has long been viewed as a safe haven asset, a reliable store of value that can be held onto in times of economic downturn or political instability. In today's world, where political tensions and economic uncertainty seem to be at an all-time high, it's no surprise that many people are considering buying gold as a way to protect their wealth. But why exactly do people turn to gold in tough times, and is it always a smart investment?

The Role of Gold as a Safe Haven Asset

To understand the appeal of gold, it's important to first consider its history and role as a precious metal. Gold has been used as a form of currency for centuries, and its value has largely been determined by its rarity and ability to be easily traded. In modern times, gold is still considered a valuable commodity and is often used as a hedge against inflation and economic uncertainty.

The Psychological Factors Behind the Desire to Buy Gold

So, why do people buy gold in times of uncertainty? One reason is that gold has a reputation as a safe haven asset, meaning it is expected to hold its value or even increase in value during times of market turmoil. This is because gold is seen as a more stable and reliable investment than stocks or other financial instruments, which can be more prone to fluctuations and unpredictability.

Another factor that drives people to buy gold in tough times is the fear of missing out on potential future gains. With gold prices historically trending upwards over time, some people may feel pressure to get in on the action before prices rise too high. This fear of missing out can be especially pronounced during times of economic uncertainty, when people may be looking for ways to secure their wealth.

The Practical Considerations of Buying Gold

Of course, there are also practical considerations to take into account when buying gold. There are various forms in which gold can be purchased, including coins, bars, and exchange-traded funds (ETFs). Each option has its own pros and cons, and it's important to carefully consider the cost and logistical issues involved in acquiring and storing gold.

The Potential Drawbacks of Investing in Gold

Despite its appeal as a safe haven asset, it's important to note that there are also potential drawbacks to investing in gold. One key consideration is that gold does not provide any dividends or income like stocks or other investments can. This means that the value of your gold holdings can only increase if the price of gold goes up, and there is no regular return on investment to offset any potential price declines.

Another factor to consider is the potential for price volatility. While gold prices have generally trended upwards over time, they can still fluctuate significantly in the short term due to various market forces. This means that there is a risk that you could see the value of your gold holdings drop unexpectedly, at least in the short term.


So, is gold a smart investment in tough times? As with any investment, it's important to carefully consider the potential risks and benefits. We are advocates of physical gold ownership and preserving wealth using gold, and we have build a world class business around this belief for the past 6 decades. We hope our guide gets you to the same conclusion and we would be delighted to help you make gold part, or indeed a growing part, of your investment portfolio. 

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