Why is gold said to be a safe haven?

Every day in London, the London Bullion Market Association sets the price of gold based on several indicators:

• Supply and Demand: In recent years, China and Russia have increased their gold imports to increase their reserves. Central banks and other nations are also buying gold en masse;
• The economic policy of central banks;
• The various crises.

Gold is therefore completely independent of the stock market and the economic health of companies. Once determined, the price makes it possible to determine the price of gold objects.

Gold is a long-term investment product that allows you to secure your money. Indeed, when financial markets collapse, national economies slow down, or the dollar destabilizes, gold plays a protective role.

The results of the American or Chinese elections, the surge in commodity prices, or even the rise in government bond yields, are causing investors to flee to safer assets, such as gold. Indeed, gold has the advantage of being stable over time. Capital gains are difficult to make when selling, but while you don't make money, you don't lose any when the stock market goes off the rails.

This is also what happened at the start of the war in Ukraine. Financial markets were partially paralyzed, and gold reached its highest level in several years.

Interest rates are rising, leading to a decrease in real estate market activity. Inflation continues to soar, and stock prices tend to fluctuate in the face of such uncertainty. To protect themselves and their assets, investors are opting for gold purchases. Thus, investments are shared and you pool the risks. In the event of a capital loss on a financial product, gold offers you an economic parachute.

Investors adopt a four-pillar strategy:

• Government bonds;
• Stocks;
• Cash;
• Gold.

If one wavers, the others stabilize and avoid significant losses. Therefore, gold should not be viewed as a profitable investment. It can be, but its primary role is to secure your savings over the long term.

Want to learn more about gold? Come discover all the specifics of gold at a GoldUnion agency or via our e-commerce site. Our GoldUnion experts and specialists are waiting to present all the benefits of investing in gold and diversifying your portfolio.