According to the World Gold Council reports, physical gold funds grew by 2.9 per cent around the world, and demand for the bars and coins increased by 4 per cent in 2018.
Investors compelled by market volatility are reconsidering their strategies in the yellow metal, although many investors find it irrelevant in many ways.
The growth in disposable income of the upper Middle class in China led to a rise in demand for such assets, where the metal held by nearly every household was supported by the decline in developed market real yields, which raised the risks of crisis. It drove new investors to seek such options.
The growth in ETF and fund holdings increased by 11.7 per cent in Europe over the past year, and this holds, specifically for the UK, where the holding increased by 13.8 per cent over the same period.
One cannot spend a part of gold or get dividends on it, but it is a significant investment as the fundamentals of long-term holdings remain the same as during historical times.
The metal is rarely consumed but can be traded anywhere in the world for the same value. Hence, the economic and political risks favour it.
Even those who held it for years can be extreme critics as it cannot be evaluated for cash flow distribution. It performed in the condition of equity market correction in the 1970s, and the US dollar was valued against it.
About 15,000 times the actual amount of physical gold found on the earth is traded in the financial markets, where most contracts are finally determined in cash.
Historically, noblemen and wealthy owners of gold kept gold jewellery and items with the idea of wealth preservation as it remained stable over the long term, and it was easy to store or even use as jewellery.
In the last few months, it gained over £1000 from £700, mainly over Brexit unpredictability. It shows in the condition of crisis, investors rely on it.
Today, the market perceives the US dollar as the currency with unfair advantages, leading nations like Iran, China, and Russia to conduct international trade in the yellow metal.
Many issues exist even with a trade in the metal where certain organizations can manipulate its value with no direct relation.
The Central Banks hold it, and some governments, desiring to protect the weakness in their economic composition, are using manipulative methods to keep their prices low.
It safeguards against the crisis, but the risks should be carefully examined. The buyer should be careful and identify if the investment will pay off within the desired duration.
The metal mostly delivers in long-term holding conditions and is expensive compared to other precious metals like silver. People who are investing may not store it in banks. They may require safe alternative ways to store, which can be expensive.