We use cookies on our website in order to make your visit more efficient and to offer you the most pleasant possible experience and to analyse the accesses to our website. We use Google Analytics for this purpose. Further information can be found in our DATA PROTECTION STATEMENT.
Publication:

Future of Gold

01 February 2022

Nicolai B. Kiskalt, Partner
Chief Executive Officer
BDO Centers LLC
|

Gold has played a key role in international relationships for thousands of years. Historically, the first gold coins were introduced in 560 B.C. in Lydia and were used as a currency before the introduction of paper money. Gradually, it began to fulfill the function of global money, which was subsequently transformed to the Golden standard and then to the Bretton Woods system. Although gold is no longer the basis for currencies, it is inherently global and traded across all time zones.

Today, gold is one of the most effective commodity investments in terms of volatility. It outperforms other metals, individual commodities, and broad-based commodity indices. Over the past 10 years, gold has delivered positive returns over the long term, outperforming key asset classes.

However, the main question remains. Is there a possibility for Gold to become an investors’ protector during the crises?

While physical Gold is a well-known safe-haven asset that investors flock to in times of market turbulence to protect their wealth, Gold is also the ultimate asset to own and possess in times of crisis and emergency. Compared to an investment in stocks, an investment in Gold often seems less risky.

In 2020, COVID-19 caused widespread declines in commodity prices. However, Gold had significantly outperformed major commodities in terms of price, demonstrating its resilience and the ability to deliver better long-term, risk-adjusted returns than other commodities.In turn, top players in the gold market support local communities while trying to continue their operations.

And what about the Gold market long-term prospects? The future of Gold market is shaped by technological advances, high production costs, and the rise of Asian economies. However, there are certain risks which the Gold market may face. That risks could be: An increased regulatory control that governs how capital is invested; Limited pool of people with required skills mix; Energy costs remain a significant part of operating expenses; and Possible cyber threats due to digitalisation process.

As you can see, gold is not going to lose its position as one of the leading financial instruments. To know more about the Global market, see our report below.