Gold price is a stone’s throw away from record highs. The precious metal futures were hovering around $2,038 an ounce on Wednesday, 2.5% away from former highs of $2,089.20 reached in August 2020. Gold is often considered a safe haven for investors during turbulent times. When expected or actual returns on bonds, equities, and real estate fall, the interest in gold investing can increase, driving up its price. While that safe haven status of gold has been questioned with the rise of bitcoin, the last few years have shown that gold is still an attractive destination when crisis hits. The troubles in the crypto industry, the recent banking crisis and the surprise oil output cuts by OPEC helped accelerate the recent moves into the precious metal. In 2011, when financial markets struggled, gold went up to $1,827. Markets did well after, and gold tumbled back to $1,062 by the end of 2015. When covid came around, gold hit an all time high of $2,069 in 2020. With covid retrieving and interest rates rising, the gold price found it’s way all the way back down to $1,655 by October of last year. The correlation is undeniable.

Slowing economies around the world, a possible and likely pivot of the FED and other central banks, a weaker dollar and a drop in the 10-year treasury yield are all signs of an expected ease in monetary policy, which is helping gold prices. The key thing that has pressured gold the past 10 years or so has been an overall outperforming stock market. That of course was not the case last year, stock markets around the world had the worst first 6 month since 1980 and gold has been on the rise since then. That 25% uptick over the last 6 month has brought out all the gold sellers, promoters and analysts, predicting numbers based on nothing. Physical gold has always been valuable and could be currency, if our current financial and economical system would experience a total collapse. If you feel that you need to prepare for a cataclysmic event like that, gold coins would be a good choice. Digital holdings or certificates would most likely be worthless in that event.

Gold has been great for trading lately and random profit taking, which will create price volatility, could attract even more traders. From an investment standpoint it’s important to look at golds track record. It can be exciting, like right now, but also very uneventful. The price barely changed from 1982-2003, and it’s only up 10% over the last 10 years.

Gold can be a great addition to your overall assets, as long as you are realistic about it.