Why is the value of gold at an all-time high?

Gold’s current kick was actually born out of war. Beginning with the Russian invasion of Ukraine. In response, the U.S. froze some of Russia’s central bank assets.

“Really the sanctions that the western world put on Russia was the start to an underlying change in how gold is thought of as a safe haven, a store of value,” said Chantelle Schieven, head of research at Capital White Research. 

When central banks around the world saw what happened to Russia, they started taking out gold as an insurance policy.  Because while it is possible to freeze or seize money in international bank accounts, it is a lot harder to seize gold bars from a vault. But that’s not the only reason gold is in such demand.

“Global uncertainty is the major driver,” said Konstantinos Chrysikos, with online brokerage Kudotrade.

Central banks and investors both have looked at the U.S. and backed away slowly.

“Concerns about slowing economic growth, geopolitical tensions, and fears of prolonged inflation have all pushed investors towards safe haven assets like gold,” said Chrysikos.

Safe haven assets — it’s less likely to lose money in them, but it’s also less likely to make much either.  

“So, the thing with gold is it’s a real asset that doesn’t pay any interest,” said Hamad Hussein, an economist at capital economics. 

Bonds for example do pay interest, but those interest rates are falling.

“So, when interest rates fall, then that increases the relative attractiveness of gold compared to bonds,” said Huessein.

Investors say they’re not missing out on too much if they park their money in gold. And the way things have gone this year, they did just fine.