There’s no denying that we have a soft spot for gold — it’s embedded in our language.
The phrase “gold-plated” is used to describe something profitable or secure, something high quality is “gilt-edged”, and let’s not forget the “midas touch” ability to turn things to gold. Although the gold standard may have been abandoned as a method of assigning value to a currency, the expression is still used to convey superiority or the highest possible benchmark.
What is less easy to determine is whether gold holds a significant place of value in an investment portfolio and, in particular, whether it’s worth buying any gold today.
Some investors seem sure that they know the answer. According to eToro, the trading and investment platform, 35 per cent of UK investors planned to increase their exposure to gold in response to the weakening of the US currency. That was the most popular strategy, ahead of buying cryptocurrency and reducing exposure to US stocks, to counteract the falling value of the dollar. Of those surveyed by eToro, 62 per cent believed that gold prices would rise over the next six to 12 months.
The value of the dollar has an inverse relationship with the gold price, meaning that when the dollar falls, gold rises. Lale Akoner, a global market strategist at eToro, said: “Growing concerns about Washington’s fiscal trajectory and political credibility have created a cocktail of uncertainty and tension surrounding the dollar. Investors are tactically addressing this by reallocating into assets such as gold.”
