Why the yellow metal is still an investor favourite
While gold has its fair share of detractors, Krugerrands, for example, are still immensely popular with investors, who bought coins amounting to 1.1m ounces of gold bullion in 2016.
it’s an ancient store of value and the oldest precious metal known to man, but does gold remain a competitive investment option? While any investment decision is ultimately a personal one, the yellow metal does offer some appealing upsides. Global demand for gold has increased over recent years, with developing economies accounting for two-thirds of the growth in demand, led by China and India. According to the World Gold Council, 2016 full-year gold demand gained 2% to reach a threeyear high of 4 308.7 tonnes.
In addition, international geopolitical uncertainty is expected to continue to drive investors towards safe-haven assets such as gold, while gold mine supply is expected to peak in 2017, which is supportive for a bullish view on gold prices. Concerns over North Korea’s nuclear missile programme, for example, pushed gold prices to an 11-month high of above $1 300 an ounce at the time of writing.
Analyst Hilton Davies, writing in a report for SA Bullion, said gold is the only hard currency the value of which does not rely on the responsible governance of governments. “In the case of all other currencies today, the holder submits to faith in the government of the country that issues the currency – this is the nature of fiat currencies,” he commented.