Published: 2019.09.19. WGC: gold is a means of protecting capital during a crisis

WGC: gold is a means of protecting capital during a crisis - 보기

The World Gold Council has published a review in which it talks about the fact that gold has unique properties that become most relevant during times of crisis.

The WGC points out that, compared to other commodities, the yellow precious metal is the best preserving savings from depreciation, which means it is a good way to invest for the long term.

In times of crisis, gold has virtually no correlation with many other assets. The important thing is that this correlation is dynamic, and through market cycles it changes in favor of investors.

During economic growth, when the stock market grows, gold usually correlates positively with stocks. However, gold is becoming a particularly sought-after asset when risk increases in the financial markets. In this case, the precious metal has an inverse correlation with other assets, that is, it protects investors from great risks and negative events that could adversely affect the capital and wealth of investors.

The flexibility of gold lies in the fact that this precious metal can act both as a consumer product and as an investment asset. When the economic situation worsens, consumers spend part of their savings on gold jewelry and household appliances so that inflation does not depreciate them.

Since gold is one of the most liquid commodities, investors prefer to “park” their capital in it at the first symptoms of a worsening economic situation. Thus, they try to wait out crisis times and save their capital from loss. The growth in investment demand for yellow precious metals always has a positive effect on its prices.