Gold is gearing up to close out its fifth-straight positive month for the first time in nearly a decade. Tuesday saw the commodity reaching another record high breaking a long-standing psychological barrier. Factors influencing this rally include an intensifying US-China row which is affecting the dollar, inflation fears and expectations that central banks would continue supporting stimulus packages to boost economies in light of a worsening coronavirus pandemic.
Alan Demby, Chairman of The South African Gold Coin Exchange and SCOIN Shop, adds that “ with the dollar substantially weaker and the market discounting more stimulus for a longer period and in larger quantities, the outlook for gold is bullish. If the dollar keeps falling, gold can keep rising, but that is a big if.”
Times of political and economic turmoil highlight the value of buying gold. In today’s climate of uncertainty generated by low interest -rates, volatile share market and inflationary concerns, gold presents a safe haven and thus an incentive to buy gold.
Demby adds: “ What I see is that gold is on an upward trajectory. Gold tends to benefit from widespread stimulus as it is considered a hedge against inflation and currency debasement. My philosophy has always been to have 15% of your portfolio in gold - as a store of value and as a rand hedge gold has proved itself. When there are uncertainties at play, cautious diversification is sensible. I’m not saying put all your money in gold, but as an asset class, it should be part of your investment strategy.”
The wisest and soundest people avoid speculation. Demby agrees with that sentiment and endorses a consistent accumulation of gold coins, as gold is a hard asset which over a long period, it keeps its value. A knee-jerk reaction to global uncertainty is not the reason to start your gold coin collection; rather, gold coins should be a sustained investment strategy. Gold is not for selling but for keeping.
If that is not encouragement, enough Demby shares this “ In 1967 a 1oz gold Kruger Rand cost R27.50 The conscientious investor who bought R10 000 of Kruger Rands back then would see his investment reflect R12 000 000 today. The gold price has been through thick and thin. It has been up and down. The guy who stuck it out for the long term is sitting on a literal pot of gold today!