The gold price and stock market work inversely. For example, if you consider the Global Financial Crisis, gold prices increased by 26% while the S&P/ASX 200 (Australian Security Exchange) fell by 28%. During the stock market crash, the demand for gold tends to increase.
During the COVID-19 crisis in Australia and globally, everyone’s interest turned towards gold, which drove its price to a historic high. However, it is mainly because of the pandemic’s fear that turned the global health crisis into an economic downfall.
The price of gold fluctuates, but it never collapses to zero. It is one of the main reasons why gold prices shoot up during the economic crisis and uncertain times. But before you invest in gold, keep an eye on the market trend and the gold prices every day at sites like Gold Bullion Australia.
Here are some more reasons as to why Australians should consider gold during times of crisis:
Gold Is a Safe Haven
Based on many past experiences, expert investors in Australia believe that gold indeed works as a safe haven asset. Since ancient times, gold has been in use, and it is a store of high value.
For these reasons, gold has become the basis for money, and it played a monetary role during the gold standard. The Reserve Bank of Australia(RBA) and other central banks hold substantial gold reserves. According to the World Gold Council, 17.2% of bullions and coins are held by central banks and government, 47% is held as jewellery, and private investors hold 21.6%.
The GDP Perspective
With the GDP in Australia expected to reach 1320.00 USD, many investors turn to bonds. But investing in gold is a better option as it does not involve bonds or paperwork. And another advantage is that gold itself is a commodity.
The value of gold is very independent. It is not affected in any way compared to that of other volatile investments like stock. Another reason Australian investors have flocked to gold this year is the drop in global interest rates. Australian rates have reached lows of 0.25%, and the RBA is also contemplating fresh rounds of quantitative easing.
Different Ways to Invest In Gold During Crisis
You can invest in gold’s physical form like bars and coins in platforms like Gold Bullion Australia. Or you can also buy shares of companies that mine gold. In whichever form of gold, you invest, make sure you concentrate on the security.
Good Entry Point
One of the main reasons for people investing in gold is for the long-term protection it offers. Though It does not pay interest or dividend, it increases in value over time and yields an attractive return on investment.
Gold has favourable returns in Australian dollars across various investing periods with 2020 seeing an average return of 28.5% and is projected to continue to the upward trend.
Though gold is not volatile as stock markets, its downside can also be dramatic. But the good thing here now is the entry point for gold today is relatively high, making it a valuable proposition for Australian investors to foray into gold investments.
Investing in gold can indeed be a complicated decision to make that too in times of crisis. It’s essential to make a well-informed decision and consider buying physical gold from sites like Gold Bullion Australia.
Gold is considered a safe haven since it is well-known and straightforward, and perhaps the first thing that comes to mind when investors face extreme and uncertain market conditions in Australia.