Gold is an asset that is sometimes in style and sometimes not. As you can see, since 1929, gold has risen a lot: an ounce of gold (an ounce is about 31 grams) has risen from $20 to $1,536 (as of today, 2021).
That is, these last 90 years, it has been profitable to buy gold because it has earned 5% per year. It is not a bad figure for so many years.
But the advantage of gold is not that it rises a lot, but two characteristics that make it very interesting, and that no other asset has:
It is the refuge par excellence in bad times.
If the economy is bad, or the stock market suffers a major crash, or we are in uncertain times: investors buy gold, and therefore, gold rises.
Look at the behavior of gold in the 2008 crisis. I have placed the SP500 (green candle line) and gold (blue line) at an identical level of 100 at the end of 2007:
As you can see, gold rallied strongly while the SP500 fell. In other words, it is a fantastic hedge for our investments. You can also see that the inverse correlation is not perfect: In the middle of 2008, both gold and the stock market have moments of decline. But by the end of the stock market crash, the S&P 500 had gone from 100 to below 50, and gold had risen from 100 to 140.
Therefore, if there are nerves in the economy, GDP falls and the stock market collapses: gold will most likely prevent us from losing, and even making money.
It is the safest asset investment that exists.
Those of us who follow and study the stock market do not think much about equity investment: it is very long-term and, therefore, boring.
They are investments to safeguard your savings, to leave for your old age, or leave as an inheritance.
But if you are interested in that type of investment, forget about investing in flats, forget about bank accounts, and jewelry: invest in gold.
As a “conservative” investment, it can be shocking because gold fluctuates quite a bit: but look at the chart comparing gold and strong currencies like the dollar, the pound, or the yen.
Gold being the yellow horizontal line, the value of the dollar is 1% of what it was in 1900. In other words, it has lost 99% of its value with respect to gold in 100 years. But the British pound has lost 99.5%.
In other words, the worst thing we can do with our money is to keep it in foreign currency.
But historically, currencies have lost almost 100% of their value. We have seen it in the last 100 years, and we will see it in the next 100. There is no currency in the history of mankind that has held its value over the long term. And sooner or later, they disappear.
And the current prospects, with brutal debt, are not rosy.
