The reason gold is still a valuable commodity
Gold prices surpassed $1,500 per ounce for the first time in six years Wednesday, as slowing global growth, negative bond yields and trade wars all bolster demand for a safe haven.
But let’s face it, gold is a commodity without much utility. It’s valuable because it’s always been valuable. Plus, people see it as a lot more reliable than newer investment vehicles like cryptocurrencies.
“People feel confident when they buy gold because it’s something they can touch and hold,” said Jeff Bredthauer, associate professor of finance at the University of Nebraska Omaha. “With the Libras and the Bitcoins, there’s still so much unknown, and there’s even more volatility.”
Gold isn’t just attracting nervous individual investors, though. China’s central bank added about 10 tons of the precious metal to its coffers in July alone. And it’s not alone.
“The trend of central banks being net buyers of gold has been going on for a number of years,” said Will Rhind, founder of the asset management firm GraniteShares.
Those central banks are doing it for the same reasons as your fund manager: If and when waters are rough, gold is still a safe bet.
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