Gold helps protect the value of money. It is an asset which is mined and supply is limited, unlike fiat money which can be printed at will.
Gold is resilient in turbulent times. Since the supply of gold is limited, in economic uncertainty the price will increase due to increase demand by investors.
Demand outstrips supply. Jewellery and technology applications make up more than 65 percent of demand. China and India account for more than fifty percent of annual demand.
Easy to buy gold. Bullion can be purchased from registered dealers, gold mining company shares and ETFs can be purchased on various stock exchanges. Gold futures and options are also available.
Gold is a hedge against inflation. It has retained its value in market turbulence.
Gold counter acts currency risk. The price of the yellow metal is determined by supply and growing demand. Since gold is quoted in US dollars, a weak dollar vis-`a- vis other currencies will result in a rise on the gold price.
Portfolio Diversification. Gold is not normally correlated with many of the assets that make up a typical investment portfolio. It is therefore a valuable tool for portfolio diversification.
Over the first half of 2016 the price of gold has rallied 25 to 30 percent. The rally is in large part due to economic uncertainty in Europe and negative interest rates introduced in Japan and Europe. According to the World Gold Council, investment demand of 1,064 tonnes accounted for almost half of overall gold demand during the first six months of 2016. The bulk of the demand came from western investors. During the first half of 2016 demand for the US gold Eagle coins increase by 84% over the previous period last year. The bulk of the growth is demand in the first half of 2016 came from ETFs (Exchange Trade Funds).
