In times of turmoil, the precious metal can shineby Ruth Jackson / June 16, 2016 / Leave a comment
For thousands of years gold has been treasured and collected. But in the 21st century is there any point holding it as part of your investment portfolio?
Gold fans have long argued that it offers an insurance policy for investment portfolios. “Gold tends to do well when other assets fall,” says Adrian Ash, head of research at gold trader BullionVault. Investors fall back on this rare and precious metal for its intrinsic long-term value and safe haven attributes.
“Some people will argue gold cannot be valued, and thus has no intrinsic value because it has virtually no industrial use, is inert and it generates no cash,” says Russ Mould, investment director at AJ Bell. But, that is also what gives gold its value. It has no secondary use other than as a safe haven investment, so tends to be unaffected by factors that can upset other investments. Further, gold carries no “counterparty risk”: a company that issues shares or bonds can go bust, leaving the securities worthless; a bank can go under, wiping out depositors’ cash. But gold does not rely on any entity’s solvency to underpin its value.