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Guard Your Wealth Against the Global Recession by Investing in Gold

Wednesday, September 2, 2020

In early August gold prices finally breached the $2,000 (£1,500) landmark which commentators have long been awaiting. This came amid shockwaves spreading across the globe from the global recession during the COVID-19 pandemic.

In the UK a recession was officially announced by the Chancellor earlier in the month, as the economy retracted for two consecutive quarters — the official definition of a recession. The yet unnamed recession has spread across the globe and has been felt in the strongest economy in the world — the US. Most of Europe is in a period of recession too, including Russia. Many economists are predicting the disruption of the pandemic will ensure the 2020 recession is worse than the 2008 recession, also known as The Great Recession.

Gold has historically proved to be a store of wealth during times of crisis and economic downturn.

So, in this article we’ll explain exactly what is driving the 2020 gold rush by investors. Here are our top reasons to invest in gold in 2020.

Gold prices topped record highs in August 2020

This month gold prices went above the $2,000 point for the first time as investors flocked to gold in response to the uncertainty facing world economies amid a COVID-19 triggered global recession.

The price fell slightly towards the back end of the month, but gold has been trending upwards for a long time, prices have risen 30 per cent, just in the last three months. And it appears likely that prices will rise higher again as other forms of investment drop in value during the recession.

The number of COVID-19 cases continue to spiral ever upwards in the US, apparently unchecked by the administration. Several states have reversed their decisions to reopen, or at least put back the date when they plan to end lockdown periods. A similar situation is taking place in the UK, second lockdowns have been enforced in Leicester and Manchester, and other towns in Northern England, and fears of a second wave of the virus could drive more investors to transfer their wealth into gold.

You can stay informed about the latest gold prices by checking our live gold price tool on our homepage. Using spot prices taken from live feeds around the world it’s regularly updated, so investors can rest assured of its accuracy.

Gold is a resilient form of investment

Recession is likely to have a much more significant negative impact on other common forms of investment. Bond yields are currently close to zero, and are negative in some markets. This is a reason why investors might wish to turn to gold investment. Adding gold to your investment portfolio can mitigate your risk level in turbulent market conditions.

The more investors turn to gold to diversify their portfolio, the higher the price of gold rises, which makes it a more valuable investment. This means the earlier you invest the better.

Moreover, stock valuations are currently higher than average in this climate, so acquiring gold even at increased prices is more affordable than other forms of investment.

Protect your wealth

Gold is a safe haven asset. What this means is that in times of crisis and market turbulence, gold prices tend to climb, or at the very least hold its value. Stocks, on the other hand, may fluctuate wildly, due to their more speculative and risky nature.

Gold bars and gold coins have been attractive since antiquity, it seems humans will never lose their fascination with the shiny precious metal. Investors today continue to be drawn to gold, more for reasons of its inherent value, because when investors buy gold, it maintains value better than almost any other form of investment.

There are many examples throughout history of gold prices remaining high during times of crisis. Gold prices were trending high during the Great Depression, the Second World War and the 1980s recession.

Gold prices also rose in response to the EU Referendum result in 2016.

Gold is on an upward trend

The rise in gold prices is not a short-term effect. Prices of the yellow metal have been trending higher and higher during the last decade as a whole, when prices almost doubled, and this year alone prices have risen by 30 per cent. Where will prices be at the end of this year when the true impact of COVID-19 has been revealed?

As the recession develops investors are likely to flock to the safety of gold in 2020.

Gold is tangible

Unlike stocks or bonds, gold is more than just numbers. Gold is tangible, it’s touchable. It cannot be easily destroyed, you can’t hack or manipulate its price. Gold is solid and dependable.

Diversify your portfolio

Get in touch with us if you have any queries about investing in gold. Alternatively, you can see if your question has already been answered in our handy gold bullion buying guide.

Or, if you’d prefer you can book a personal appointment in our Wolverhampton office. Give us a ring on 01902 623 259 to arrange a consultation.