A reliable physical asset
Because it is a physical asset, gold is seen as safe and reliable, and something that will never go out of fashion. This has always meant that, when the markets seem uncertain, gold tends to do well.
Investing in shares is a different prospect. While there are compelling success stories out there, it isn’t unreasonable to suggest that these generally involve the very lucky, or the very skillful. Due to the complex and intangible nature of financial markets, success is hard to come by.
Banks are also increasingly vulnerable to cyber attacks, and are not strong enough to withstand serious international crises. Gold’s scarcity means that its capacity to retain value always remain.
Risk and reward
Investing in shares can be rewarding, as you can invest in businesses that you are interested in, or passionate about. Hopefully the business will create products and services which will continue to be valuable far into the future.
But the decisions you make at this stage are likely to be based on speculation. The financial markets have shown throughout history that they are not the place for safeguarding wealth, and even the best companies in the world can struggle (as can be seen in the graph above).
On the other hand, the risks associated with gold are much smaller. And again, as the numbers show, the potential rewards can in fact be greater.