23rd September 2016
By Josh Saul – The Pure Gold Company
Few other substances on Earth have held the same sway over humankind’s development as gold. It’s been bought, bartered and traded with since almost the dawn of civilisation, and even today it remains a compelling choice for both seasoned investors and those new to trading.
Following the global economic crisis that first emerged in 2008, prices in gold have continued to ascend, in recognition of its relative security in comparison to other forms of capital. Whether your investment is in gold bullion, coinage, and trade commodities, or in mining companies actively discovering, refining and processing, gold is a firm investment decision that can hold you in strong stead over the long term.
Yet in today’s era of renewed political uncertainty, most recently stirred by the United Kingdom’s unprecedented ‘Brexit’ vote – which, from whichever angle it’s seen, is set to bring our economy into uncertain times – does gold still stand tall as one of the wisest areas for investment? Historical precedent and the latest expert advice suggests to us that it does.
All That Glitters
The United Kingdom’s exit from the European Union saw a degree of unease filter through the world’s stock markets and sent Sterling into a downturn, while interest in gold investments soared. According to a report in The Independent, Google’s trends analysis saw a 500 per cent increase in searches for ‘buy gold’ in the immediate aftermath of the Brexit vote, and as June came to a close, the Financial Times reported gold prices lifting to $1,350 per troy ounce.
While uncertain economic times, especially those caused by political events, often present challenges to the financial world, they are renowned as being excellent conditions for gold. The big question today is whether gold’s price will continue rising in relation to further challenges and stresses in the international economy, including the declining growth rates of super economies such as India and China, where gold demand is consistently high, to the United States presidential election. The freshest example of gold’s tendency toward continuing growth comes in its behaviour during 2009. The year after the worst financial crash since the Great Depression, gold prices rose by 24%.
The Cost of Uncertainty
In the wake of Brexit there will be changes to our economy, and with change, of course, comes risk. Gold is the stable commodity best known and utilised as diversifying risk, offering calmness during periods of fluctuation. Being unaffected by interest rates increases the stability you can expect when you invest in gold. It might also be said that political and economic events such as Brexit foster an atmosphere that further boosts gold demand, continuing to nudge its price upwards.
This isn’t only a matter of common sense or looking in the history books, however. Leading analysts suggest that gold will continue to distinguish itself as an excellent long-term investment. It has also been said that those already selling off gold investments in the immediate aftermath of the Brexit vote, hoping to ride the wave before stability reasserted itself, may have foregone long-term gains.
If you’re new to trading, don’t feel like you’re restricted from participating in this opportunity without substantial financial backing. Our advisors are able to discuss with you, impartially, the advantages that you hope to gain through investing in gold, as well as defining the budget and potential returns that best fit your circumstances. What that means is that you’ve full control over your level of investment, affording you extra peace of mind.
A Shining Future
Even as the effects of Brexit become clearer, other factors will continue to define the dynamics of the coming years. These range from the question mark hanging over other European Union member states that may opt to hold a referendum of their own, through to the recovery of Chinese spending in relation to the country’s demand for gold.
In terms of Brexit itself, investors in gold have two salient points to remember. Firstly, Brexit has kickstarted an initial increase in gold prices. More pertinently, it has offered the Federal Reserve an incentive to keep interest rates low. That being the case, gold will continue to escalate. Brexit has created a renewed spark of interest that, combined with international factors, has caused Thomson Reuter’s July 2016 GFMS Gold Survey to declare that ‘gold is back’, as well as upwardly revising its average price outlook to $1,279 per ounce from its earlier April 2016 forecast of $1,189 per ounce. Altogether, our internal findings suggest gold’s price has increased 330% since 1999, which makes it the best performing asset of the 21st Century.
All these factors make the climate favourable for gold investment as a long term interest, with huge potential going forward. Invest today, and you can be expect security and a stake in the ultimate ‘safe haven’ commodity, and a source of stability in what looks to be several years of twists and turns.