Gold is a highly valued and sought after by individuals for various reasons, including the pursuit of investment objectives such as wealth preservation.
As a long-term hedge against inflation, particularly in the face of currency devaluation caused by government manipulation of fiat currencies, gold is highly regarded. This is partly due to its status as a "hard" asset, which means it is difficult to mine and introduce into circulation. Once in circulation, gold is exceptionally durable and does not undergo chemical deterioration, this property means all gold ever mined still available to us in some shape or form. The high stock (gold currently above ground) to flow (mining supply) ratio is considered crucial for its ability to preserve wealth, with a low supply to the market with an estimated inflation rate of a 2% or less. With high demand and generally low supply, gold is widely used to maintain purchasing power over the long term.
In times of extreme geopolitical and economic turmoil, gold is also considered a "chaos hedge". The recent increase in gold prices prior to the Ukraine invasion in 2022 serves as an example of this. The rush to secure safe haven assets during times of stress is motivated by the desire to hold tangible assets with a proven track record of holding value, including good market depth and global saleability.
Additionally, gold has a long history of being used as a store of value and medium of exchange. It has been used as a form of currency for thousands of years and is recognized and accepted worldwide. As such, it can be a useful asset to hold in a portfolio as a means of diversification and risk mitigation.
In our view, purchasing gold is a sound financial decision as it is a tangible asset that can protect against inflation, provide stability in times of economic uncertainty, and has a long history of being used as a store of value.
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Chard (1964) Ltd
SatNav Postcode: FY4 1LY
Tel: 01253 343081
Company No: 01378220
VAT No: GB 157 0712 74