Gold isn’t just a commodity to shield you from price inflation, it’s also becoming a tool to protect you from subzero interest rates. With central banks all over the world either adopting or considering negative interest rates, consumers are turning to the yellow metal to preserve their wealth.
According to a new report from the World Gold Council (WGC), investors purchased gold at a record rate in the first quarter of 2016 amid fears of interest rates going deeper into negative territory, a British exit from the European Union and weak global economic growth.
In the first three months of the year, gold demand soared 21 percent to 1,290 tonnes. This is the biggest first quarter increase since these records were started in 2000, when the yellow metal commenced its upward trends. Investors also jumped into gold exchange-traded funds (ETFs), a way for individuals to gain access to gold without having to actually acquire physical bullion.
“At the start [of the crisis] central banks around the world slashed their interest rates to zero, then they embarked on quantitative easing,” the report stated. “The world hadn’t seen negative rates before. And it’s expanded significantly over the past two years. Investors are now asking how these moves are going to affect a whole range of asset classes and the banking system.”
Meanwhile, the price of gold (in U.S. dollars) has climbed 17 percent in that same time period. This is the best performance of the yellow metal in close to 30 years. At the time of this writing, gold is trading at around $1,270 an ounce.
With stock exchanges worldwide in turmoil and central banks implementing reckless monetary policies, gold is viewed right now as the ultimate safe haven. As price inflation rears its ugly head in the United States, you’re likely going to see huge spikes in the price of gold moving forward.
Gold is king once again.
What 17%??? If you bought the yellow metal in 2011 at the high of $1850 something there about, you would still crying in your cherrios. The gold dealers are always saying how great gold is, but they never tell you about the drop in price every time the economy tanks. Or that world governments are in and out of the gold market all the time, affecting price.