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.

Finweek English Edition - - Marketplace Investment -

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.

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