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Gold Investment

During times of economic uncertainty, investors often turn to gold as a way to protect their portfolios from downside risk.

A Gold Bond investment is a popular way to diversify a portfolio and hedge against market volatility. As a commodity bond, it offers exposure to the performance of gold, which has traditionally been seen as a safe-haven asset. 

Gold bonds are considered a low-risk investment because they provide capital security and have solid ring-fencing of capital. This means that the investment is protected by a security that is independent of the underlying asset. 

Investors who purchase gold bonds benefit from capital protection while also gaining access to the potentially volatile price movements of gold. Moreover, gold bonds offer tax benefits, making them an attractive investment option for those looking to minimize their tax liability. With a range of gold bond products available in the market, investors have plenty of options to choose from to meet their investment goals and risk appetite.

Why Invest in Gold Bond

Throughout history, gold has been associated with wealth and prosperity, serving as a liquid store of value that was frequently traded. Although the gold standard is no longer in use, it remains an important asset for investors seeking to diversify their portfolios and safeguard their wealth outside of the banking system. In the UK, the uncertainty surrounding Brexit has driven demand for gold, with the price of gold rising by 22.3% per ounce since 2016. This has led to an increase in worldwide gold demand, with central banks purchasing more gold in 2018 than in any other year for the past 50 years. In 2019, demand remained strong, with China and other countries continuing to add to their gold reserves. With the economic impact of Covid-19, there has been a surge in consumer purchases of gold bullion as a safe haven asset. Investing in actual gold can be a reasonable way to diversify a portfolio and mitigate risk during times of stock market volatility and economic uncertainty.

Excellent Way to Build and Protect Wealth

Investing in gold is considered a reliable way to preserve and increase wealth, and it is a popular option for diversifying investment portfolios. While the price of gold may fluctuate in the short term, it generally maintains its value over longer periods, providing a hedge against the depreciation of fiat currency. For investors looking to make significant gold investments, purchasing British gold coins can be a tax-efficient option, as they are exempt from VAT and Capital Gains Tax (CGT).

“Crisis Commodity” In The Times of Adversity

Gold is widely recognized as a reliable investment option during times of financial and geopolitical uncertainty, earning it the nickname “crisis commodity.” It tends to outperform other investments as global tensions rise and trust in governments deteriorates. Not owning gold means placing complete trust in the government to keep the economy afloat. 

Concerns about global currency debasement have prompted many people to consider investing in tangible assets such as gold, which can see significant gains in value if a significant currency debasement occurs. Investing in physical gold can provide protection against banking risks and diversify wealth distribution by keeping assets outside the financial system. 

Unlike fiat currency, gold’s value is not determined by governments, which rely solely on laws to back their currencies that have no intrinsic value.

Increasing demand vs the Limited Supply

As geopolitical tensions and economic uncertainties continue to rise in Europe and other parts of the world, investors are turning towards gold as a safe haven asset. During the first quarter of 2019, gold demand in countries like India, Turkey, and Iran increased, and in the UK, there was a 58 percent rise in gold bullion demand leading up to the original Brexit deadline in March.

Gold is a highly valuable and scarce precious metal. If all of the gold that has ever been mined was melted down and refined, it would form a block with a volume of 8,549 cubic meters. To put that into perspective, the cube would measure approximately 20.4 meters on each side. The metal’s worth is further reinforced by its rarity, which was initially valued for its colour, malleability, and anti-corrosive properties. A study shows that copper is found in the Earth’s crust at approximately 55 parts per million, while gold is only present at 0.0038 parts per million, underscoring the natural scarcity of this valuable metal.

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