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“There are also going to be people moving money from risky assets like the stock market to safer assets like cash, gold, and government bonds,” he said.
Gold has historically been considered a reliable commodity for investors, immune to stock market crashes and government decisions.
Does gold have any real value?
“How would having a bucket of gold on a desert island help you? It would be useless, you can’t eat it, you can’t plant crops with it. But people like shiny stuff,” he said.
Source: SBS News
Much like the stock market — where valuation is based on perceived worth as opposed to cash, which has direct buying power — there is a belief that gold is scarce and precious, which gives it a valued status in society, Stoeckel said.
He said the appeal of gold over the centuries is that it is a physical, tangible object that people believe governments and institutions will continue to “honour and value”.
How would having a bucket of gold on a desert island help you? It would be useless, you can’t eat it, you can’t plant crops with it. But people like shiny stuff.
Andrew Stoeckel, Australian National University
“Unless another explorer like Columbus comes across a big bucket of gold in the Americas, we’re unlikely to see a change,” he said.
How does investing in gold work?
“Gold has zero cash component because the expected appreciation is far higher.”
You can also buy shares in a gold exchange-traded fund, where gold is bought on behalf of shareholders.
