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Gold is currently experiencing a remarkable high in the investment world, with the Gold price of the precious metal has recently reached record highs, well above €68,000 per kilo. This phenomenon is fueling the age-old debate about the value of gold as an investment. On the one hand, some consider it essential for protection against inflation, while others, including famed investor Warren Buffett, dismiss it as a "barbaric remnant" with lackluster returns.
The history of gold as an asset class began substantially in 1971 when the U.S. Gold Standard let go. In the 1970s, the price of gold rose more than ten times, significantly outperforming both consumer prices and the stock market. However, in the decades that followed, gold suffered major losses in value, especially during the stock bull markets of the 1980s and 1990s. Despite this, gold made an impressive comeback in the first decade of this century, partly due to fears of loose monetary policy and global turmoil, which saw it rise by 275% compared to a 9% decline in the S&P 500.
While gold has traditionally been seen as a hedge against inflation, recent trends suggest that it is also a Safe Harbor broader economic and political uncertainties. For example, the precious metal served as an attractive alternative during the 2008-09 financial crisis and periods of geopolitical tensions, such as the current war in Ukraine and the growing rivalry between China and the US.
Recent analyses point to an increase in gold purchases by central banks worldwide, at levels not seen since the 1960s. This may point to a strategy to diversify away from the U.S. Dollar, especially in light of possible geopolitical disruptions. Experts such as those from UBS Global Wealth Management Therefore, recommend an allocation of about 5% of a diversified portfolio to gold as a hedge.
The increase in gold purchases by central banks, combined with the historical gold market cycles and recent geopolitical developments, could have a positive effect on the gold price in the coming years.
On Thursday 16 May 2024, Holland Gold will host a event on Gold and world politics in the Georg Kessler Lounge at the AFAS AZ Stadium.
The event consists of three parts: one interview, one presentation and a Q&A session for the audience. For example, the gold rush is discussed in World Politics, the geopolitical tensions that are rising every day; in Ukraine, the Middle East, in West Africa and around Taiwan. What impact does this have on the financial system? Central banks seem to be caught in a gold rush. The yellow metal achieves a Record price. How long will the US dollar remain dominant?
Buy your tickets here: https://www.hollandgold.nl/evenement/
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On behalf of Holland Gold, Paul Buitink and Joris Beemsterboer interview various economists and experts in the field of macroeconomics. The aim of the podcast is to provide the viewer with a better picture and guidance in an increasingly rapidly changing macroeconomic and monetary landscape. Click here to subscribe.
