Gold - a solid investment worth considering

When it comes to precious metals, consistency is the key: fine gold and silver bars are, elementally, fine gold and silver bars, no matter what language you speak and what currency you spend. Investors have physical precious metals in coin and bar form, stored in BullionRock’s secure vault in Guernsey; holdings that play a fundamental part in their diversified investment portfolios.

The World Gold Council states that:

“Many investors are drawn to gold’s role as a diversifier – due to its low correlation to most mainstream assets – and as a hedge against systemic risk and strong stock market pullbacks. Some use it as a store of wealth and as an inflation and currency hedge.

As a strategic asset, gold has historically improved the risk-adjusted returns of portfolios, delivering returns while reducing losses and providing liquidity to meet liabilities in times of market stress.”

Surrounded by water and hewn from granite, Guernsey affords BullionRock’s clients some valuable advantages: physical location, natural security, low crime rate, financial services’ know-how and an independent tax system, to name but a few. BullionRock trades and stores your precious metals cost-effectively and securely without the imposition of any sales taxes.

UK tax residents can also enjoy capital gains tax-exempt gold and silver investments in the form of gold sovereigns and gold and silver Britannia coins.

Once purchased through BullionRock, the cost of storing precious metals is less than the management fees charged by exchange-traded funds. Your physical bullion, in the exact form, weight and purity you have purchased, is held within a secure six-sided steel and concrete vault that is constantly recorded and monitored, just as you would expect.

So, is the time right to consider an allocation to precious metals in your portfolio? Well, a number of external factors are usually responsible for movements in the price of gold:

Global economics – Gold generally does well during global economic slowdown, as it is considered a safe haven.

Geopolitics – Gold tends to do well during times of geopolitical uncertainty.

The US dollar – Gold is denominated in US dollars and your return will therefore be influenced by changes in the exchange rate of US dollars to your base currency.

Central banks – Central banks are significant holders of gold as a reserve asset, their buying and selling can therefore materially impact the gold price.

Interest rates – Low interest rates generally tend to support or improve the gold price, since the opportunity cost of holding gold, which generates no income, decreases.

Inflation – Gold prices have, historically, risen, during times of rising inflation.

In 2019, most of these factors have been playing to gold’s advantage: economic downturn fears, an unpredictable US president and low, or negative, interest rates have all been on hand.

Perhaps unsurprisingly then, the central banks of most countries have been buyers of gold and last year’s net investment (some 651.5 tonnes worth c USD26billion) was the highest since the abandonment of the gold standard in the 1970s.

Perhaps it’s time to join them?