To the consternation of stakeholders, central banks brought global bond yields to both low and high spots, casting a shadow of uncertainty in the global financial scene. It is quite interesting to note, however, that the price of gold skyrocketed, making it one of the best assets to profit from.
Because of the unforeseen shift in global monetary policy, US investors and Fed board members alike expected an increase in interest rates through the entire year. There are talks of Fed remaining on hold until December, and there are also news of Fed cutting rates twice before the year ends. Board members played safe with their statement, and hinted at a “let’s wait and see” take on the matter.
Even the European Central Bank had an uncertain stance, announcing that they may either cut down the rates, or extend bond purchases. The financial market already expects other banks to follow ECB’s lead, with the exception of The Bank of Japan.
Such efforts to save the central banks’ and their nation’s economies is normal, but not without serious risks. The noncommittal approach of central banks could give way to brewing tensions between the United States and its partners, or between the US and Iran. Adding to these concerns is Brexit, which is already causing a brouhaha in the European Union.
Where Gold Comes In
To resolve the dwindling economy, stockholders eye the champion: gold investments. With the demand for gold, there comes an increase in its price. The drawback would mean weaker consumer demand as well, although there is much to be positive about accumulating gold assets.
People buy jewelry, and gold is the primary material used to manufacture them. Gold can also be used in technology and as a long-term financial investment.
Gold is also seen as a valuable asset because it already has a steady stream of risk-adjusted returns. Aside from being a source of return, gold assets survive in both recessionary and expansionary periods, given that it is as liquid as other financial securities. Gold can be used anywhere, and by everyone, so the demand for it will not waver, despite a projected price increase.
If stockholders turn to gold investments, they have a wider avenue of surviving money crashes and bankruptcy; the jewelry market alone is continually growing. Besides, market downturns actually lead stock buyers and consumers to gold, as it can easily be sold and acquired. Any perceived losses can be quickly regained.
Should gold become a much-desired asset this year, the attitudes of investors towards gold could change for the better, and capital flows could spark a heightened interest in gold’s performance in the market.
Gold is not only a luxury good, but it is also a component in electronics technology and a safe investment. In fact, gold as a luxury good has performed an average of 50 percent in the market, compared to central banks, which is a meager 10 percent. And that is only for a decade-long performance.
Gold can bring easy money despite uncertainty and heightened risk in the global financial scene. Perhaps it is time for majority of stakeholders to give gold a chance.