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The golden hedge, why gold remains as the safe haven investment of choice

The golden hedge, why gold remains as the safe haven investment of choice
26 Apr 2024 11:05

KHALED AL KHAWALDEH (ABU DHABI) 


Throughout history very little has remained stable, empires have risen and fallen, along with their currencies, booming businesses have gone bust, and entire civilisations have collapsed. Yet, since the days of the ancient Egyptians (and according to some historians even before then) humanity’s obsession with gold has endured. 


Prized for its shiny exterior and malleability, which make the element perfect for jewellery, and more recently semi-conductors, the metal is considered by many as a safe hedge against an otherwise tumultuous landscape of economic uncertainty and geopolitical unrest. 


For average citizens and armchair investors today, the metal has retained its lustre as the investment of choice when things aren’t looking too stable. This can be seen by the recent spike in gold prices amid geopolitical turmoil in the Middle East. 


Certainly, this is something that has been observed by the retailers at Abu Dhabi Gold Souk in Madinat Zayed, who say prices have been steadily rising, with demand as strong as ever. 


“We have a lot of people coming in, I don’t think the price will fall below what it is today, if I were you, I would buy,” one jeweller from Al Jazira Jewellery in Madinat Zayed told Aletihad on Thursday. 


Gold possesses a unique combination of characteristics that makes it a resilient asset. Its tangible nature provides a sense of security in an increasingly digital financial realm. Unlike currencies or stocks, which can be subject to volatility and manipulation, gold exists physically, ensuring its enduring worth. 


Moreover, gold’s scarcity contributes significantly to its appeal as an investment during crises. Unlike fiat currencies, which can be printed endlessly, the supply of gold is limited. This inherent scarcity underpins its value, shielding it from the ravages of inflation that often accompany economic downturns.


Perhaps most importantly, throughout millennia, civilisations across the globe have revered gold as a symbol of wealth and prosperity. This universal recognition imbues gold with a sense of stability and permanence that transcends geographical and cultural boundaries. Consequently, investors turn to gold not only for its financial attributes but also for the psychological reassurance it offers. As put by the late great American writer and economist, Gary North. 


“Gold is forever. It is beautiful, useful, and never wears out. Small wonder that gold has been prized over all else, in all ages, as a store of value that will survive the travails of life and the ravages of time.”

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