Six Main Reasons to Own Gold 2024
In the swirling currents of global markets, an unmistakable trend has emerged: the relentless ascent of gold to new heights. In a mere 50 days, from Valentine's Day to the present moment, of April 4th, 2024, the price of gold has surged from the $1987.50 range to the $2300 range, having risen above that mark only yesterday. This marks a staggering gain of over $300 Oz or a remarkable increase of over 15%. This meteoric rise underscores gold's enduring appeal as a haven asset amidst mounting economic uncertainties and geopolitical tensions. As investors grapple with volatility and seek refuge from market turbulence, gold remains a beacon of stability and resilience, offering reassurance in uncertain times. Here are a few of the top reasons we love gold.
1. Navigate Market Fluctuations: Embrace Stability Amidst Chaos
In the turbulent waters of financial markets, gold stands as a steadfast pillar of stability. Its price movements often diverge from the unpredictable whims of stocks and bonds, and in the case of the last week or more, the crypto markets, providing owners with a dependable sanctuary amidst the chaos. Historical data from market crashes underscores gold's remarkable resilience: in the post-period of the 2008 financial crisis, while stock markets were in various phases of freefall, uncertainty and volatility, gold prices soared for over 36 months, making new all-time highs along the way, demonstrating its role as a hedge against market turmoil.
Gold's independence from traditional financial assets is rooted in its unique properties as a tangible and finite resource. Unlike stocks and bonds, which derive their value from the performance of companies or governments, gold's worth is inherent and unchanging. This intrinsic value provides investors with a sense of security, knowing that their wealth strategy is anchored in a tangible asset unaffected by market sentiment fluctuations.
Gold's reputation as a store of value is not a recent phenomenon but a legacy that spans centuries. From ancient civilizations to modern-day investors, gold has maintained its status as a symbol of wealth and stability. This enduring appeal is evident in its consistent performance during economic uncertainty, making it an essential part of a diversified wealth strategy as displayed in table #1 below.
2. Shield Against Currency Devaluation: Safeguard Your Wealth
As governments worldwide engage in unprecedented monetary stimulus measures, the value of fiat currency and our purchasing power steadily erodes. Herein lies the critical role of gold: it remains impervious to the ravages of inflation and currency devaluation. Empirical evidence from historical inflation rates underscores gold's efficacy as a hedge: during periods of high inflation, such as the 1970s, gold prices surged, outpacing the depreciation of fiat currencies.
The finite supply of gold and its universal desirability imbues it with inherent value that transcends national borders and monetary policies. While fiat currencies can be printed ad infinitum, gold's scarcity ensures its enduring purchasing power over time. Geological constraints on gold production underscore this scarcity: despite advances in mining technology, the annual supply of gold remains relatively stable, reinforcing its status as a reliable store of value. This supply stability, if anything, will erode over a more extended period of time as we reach “peak gold” and population growth continues to take over geographical locations that might otherwise be suitable for mining.
Moreover, gold's role as a hedge against currency devaluation extends beyond economic theory to real-world applications. In countries experiencing hyperinflation or currency crises (Venezuela, Iran, Argentina, Sri Lanka, Greece, and Ukraine, and others), gold often emerges as the preferred medium of exchange, providing individuals with a means to preserve their wealth amidst financial turmoil. This timeless appeal underscores gold's status as a trusted asset for investors seeking to safeguard their wealth against the erosive effects of inflation.
3.Embrace the Limited Supply: Harness the Power of Scarcity
Amidst the abundance of fiat currency, gold shines as a beacon of scarcity. Its finite supply and controlled production imbue it with an intrinsic value that transcends market fluctuations. Empirical evidence from gold production statistics underscores its scarcity: annual gold production has remained relatively stable in recent years, underscoring its rarity compared to endlessly printable fiat currency.
The limited supply of gold is not merely a theoretical construct but a tangible reality with profound implications for investors. Unlike fiat currencies, which are being devalued through monetary policy and currency manipulation, gold's scarcity ensures its enduring value over time. This scarcity is further reinforced by geological constraints on gold production, which limit the rate at which new gold can be extracted from the earth.
Furthermore, gold's scarcity confers a unique status as a universal store of value, recognized and revered across cultures and civilizations. From ancient civilizations to modern-day investors, gold has served as a symbol of wealth and prosperity, transcending geopolitical boundaries and economic cycles. This enduring appeal underscores gold's timeless allure as a tangible asset with intrinsic value.
4.Fortify Your Portfolio: Weather Economic Storms with Gold
In economic upheaval and financial distress, gold emerges as a stalwart guardian of wealth. Empirical evidence from historical market data corroborates gold's role as a haven asset: during periods of economic downturns, such as the dot-com bubble burst of 2000, gold prices remained resilient, providing investors with a hedge against systemic risks.
The resilience of gold as a haven asset stems from its unique properties as a tangible and universally recognized store of value. Unlike stocks and bonds, which are subject to the whims of market sentiment, gold's worth is intrinsic and immutable. This intrinsic value gives investors a sense of security, knowing that their wealth is anchored in a tangible asset unaffected by the vicissitudes of economic fortune.
Furthermore, gold's historical track record as a store of value spans millennia, transcending geopolitical upheavals and economic cycles. From ancient civilizations to modern-day investors, gold has retained its allure as a symbol of wealth and stability. This enduring appeal is reflected in its consistent performance during economic uncertainty, making it an indispensable component of a diversified investment portfolio.
5.Embrace Tangibility: Grasp the True Value of Gold
In an increasingly digitized world, the tangible allure of physical gold is undeniable. Its intrinsic value and timeless allure resonate with investors seeking tangible assets. Empirical studies on investor behaviour reveal a preference for physical assets during times of uncertainty, underscoring gold's dual appeal as both an investment vehicle and a tangible store of value in an uncertain world.
The tangible nature of physical gold gives investors a sense of security and control over their wealth strategy. Unlike digital or paper assets, which are vulnerable to cyberattacks or systemic failures, physical gold can be securely stored and accessed without reliance on intermediaries. This tangible presence imbues gold with a sense of permanence and stability, making it an attractive option for investors seeking to diversify their wealth strategies and mitigate risk.
Furthermore, gold's universal desirability as a store of value ensures its liquidity and marketability across geographies and cultures. Whether in the form of bullion or coins, gold retains its intrinsic value and purchasing power, providing investors with a versatile and resilient asset. This universal appeal underscores gold's status as a timeless store of wealth, valued and cherished by investors throughout history.
6. Diverse Investment Options: Customize Your Financial Fortress
Gold offers diverse wealth strategy options, each tailored to suit investors' unique preferences and risk appetites. Physical buyers can tailor their gold ownership using products ranging from bullion to numismatic coins to align with their financial goals. Although data from investment trends indicates a growing interest in gold-backed exchange-traded funds (ETFs), which are said to provide investors with a convenient and transparent avenue to gain exposure to the precious metal Delta Harbour with 20-plus years of experience, does not recommend buying these paper assets as they resemble and act much more like other paper assets, often moving in the opposite direction of actual spot physical gold prices. That is the paramount issue of trust that the actual product exists, as you cannot personally audit the product. If it is not in your name and owned solely by you without the expectation of shared ounces, hypothecation risks or third party-
The diverse range of investment options available in the gold market enables investors to customize their portfolios to meet their specific objectives. Whether seeking capital preservation, portfolio diversification, or inflation protection, gold offers a versatile and resilient asset class. From physical bullion for long-term wealth preservation to gold ETFs for tactical portfolio allocation, investors can access a wide range of investment vehicles designed to meet their individual needs.
Furthermore, gold's transparency and liquidity make it an attractive option for investors seeking to navigate volatile markets and uncertain economic conditions. Unlike some alternative investments, which may lack transparency or require specialized knowledge, gold offers investors a straightforward and accessible investment option. Whether purchased through reputable dealers or traded on regulated exchanges, gold provides investors with a transparent and reliable means of diversifying their portfolios and preserving their wealth.
Canadian Consumer Insights:
Drawing insights from the Canadian consumer psyche, it becomes evident that Canadians prioritize stability and security in their investments, reflecting a cautious yet prudent approach to wealth strategy planning. Despite being often characterized as passive investors, Canadians demonstrate a deep-seated awareness of the intrinsic value of precious metals like gold. This mindset is influenced by Canada's resource-rich economy, where industries such as mining and natural resources play a significant role in driving economic growth.
Data on gold ownership in Canada reveals a steady increase in demand, particularly during periods of economic uncertainty. This reflects Canadians' propensity to turn to gold as a reliable hedge against market volatility and currency fluctuations. In times of economic turbulence, such as the global financial crisis of 2008 or the recent COVID-19 pandemic, Canadians have sought refuge in gold as a haven asset, protecting their wealth from the erosive effects of inflation and currency devaluation.
Furthermore, Canada's multicultural society fosters diverse investment preferences and attitudes toward gold ownership. While some Canadians view gold primarily as a means of preserving wealth and mitigating financial risks, others may see it as a tangible symbol of prosperity and heritage. This cultural diversity adds depth to the Canadian investor psyche, shaping their attitudes towards gold as both an investment vehicle and a store of value.
At Delta Harbour, we observe a diverse tapestry of individuals from all walks of life. From the blue-collar worker to the white-collar professional, the spectrum of clientele encompasses various occupations and backgrounds. Here, you'll encounter schoolteachers, plumbers, and pizza delivery drivers mingling with seasoned Fortune 500 company owners. Professional athletes share the same space as lawyers, doctors, and dentists, each bringing their unique perspectives to the table. Moreover, you'll find small coin collectors alongside those who prefer overseas storage and investors diversifying their wealth strategies across the globe. In this vibrant community at Delta Harbour, diversity thrives, fostering an environment where individuals from various professions and interests come together to exchange ideas and perspectives. Quite often, our base of clients gets subjected to all kinds of other opportunities by simply having had the wherewithal to make that first purchase of gold or silver.
Amidst this eclectic mix of individuals, a common thread emerges—the pursuit of financial security and prosperity through strategic wealth diversification. Many recognize the timeless allure of gold ownership as a cornerstone of their investment portfolios and a pathway to enduring wealth.
2024 is just another example of what we have learned over the past 20 years and much longer for those who have come before me. That is to say, the Canadian investor's inclination towards stability and security, coupled with the country's resource-rich economy, underscores the importance of gold as a strategic component of their wealth strategies. As economic uncertainties persist and market volatility intensifies, Canadians will likely continue turning to gold as a reliable hedge against financial risks, reaffirming its enduring appeal in the Canadian investment landscape. Now you know. What you do with it is always up to you.
Yours to the penny,
Darren V. Long
