Metal in times of crisis

Does gold offer asset security?

Due to unrest in North Africa and the Middle East, as well as fears of rising inflation, gold prices rose by around six percent in February. This was the largest monthly increase since the beginning of 2010. Gold therefore remains the answer to the currency crisis. Historical purchasing power ratios between various currencies and gold support this statement. Investors who bet on gold at the end of the nineteenth century had to wait almost thirty years, but during the hyperinflation of the 1920s, their investment rose well above its purchasing power at the time of purchase. At the same time, the German mark completely lost its value. A similar situation occurred in the case of investors who bought gold before World War II. The years 1979/1980 are another example. In times of uncertainty, political crises, and inflationary trends, the purchasing power of gold increases rapidly. Investments in gold during times of destabilization do not bring quick profits, but if you wait out the crisis, they are the safest.

Will the price of gold continue to rise? 

If inflationary trends intensify worldwide, gold prices will benefit. In addition, due to its profitability and security as a long-term investment, gold has recently been bought up en masse by central banks. This additional demand for gold will affect the already high investment demand and jewelry demand, especially in Asia. As rising gold prices attract buyers and deter sellers, it can be assumed that even without a serious crisis, gold prices will slowly rise or stabilize.

What are the disadvantages of gold bars and coins? 

Investment coins and bars can be bought and sold at many banks and online retailers. However, investors should pay attention to the reputation of the service provider, as there are more and more counterfeits in circulation. In times of crisis, the biggest advantage is the ability to access gold directly. It can be stored in bank vaults, but apart from the high rental costs, this can result in a lack of or difficulty in accessing it during a serious crisis. On the other hand, storing it at home poses a potential risk of theft. Another disadvantage is the margins, which are higher for lower denominations. Therefore, it is definitely more profitable to make a one-time purchase of coins/bars with a higher value. Smaller denominations also mean lower profits from subsequent sales.