Hi,
Stock market crashes are the worst-case scenario for investing. When markets collapse, the majority of investors need safe havens for their capital. Gold has long been one of the most secure assets amidst economic turmoil. But is gold actually a good investment when stock markets crash? Let’s take a closer look at how gold performs when economies are in crisis and why it’s the first choice for protection-seeking investors.
Gold as a Safe Haven Asset
Gold has historically been a “safe haven” asset. It does not rely upon company profits, interest rates, or the economic cycles upon which stocks depend. When there is a crisis, investors turn towards gold as a way of preserving their wealth and demand goes up and prices increase.
One of the primary reasons why investing in gold is a good idea when the stock market crashes is the metal’s past performance. For example:
In the 2008 Financial Crisis, the S&P 500 fell by more than 50% in value, yet the value of gold increased by nearly 25% by the close of 2009.
During the 2020 COVID-19 collapse in the markets, the value of gold reached a record high of well over $2,000 per ounce as investors sought refuge from uncertainty.
Even during past geopolitical crises such as the 1970s inflation crisis, the value of gold went through the roof as investors ran for economic cover.
Why Gold Holds Value During Market Crashes
- Hedge against inflation
Stock market crashes typically occur during economic downturns when the government retaliates with the introduction of policy measures capable of devaluing the paper money. Gold is a tangible asset whose value is not eroded and actually appreciates when inflation devalues cash.
- Scarcity and High Demand
Unlike fiat money, which is printed indefinitely, there is a limited amount of gold. Its rarity ensures it will increase in value with time and therefore is a good investment choice when there is economic uncertainty.
- Diversification
Gold’s price fluctuations have historically had little correlation with stock markets, i.e., its price fluctuations are generally independent of the stock markets. The inclusion of gold in a portfolio reduces the overall risk and provides stability when equities drop.
- World Acceptance
Gold is accepted everywhere and recognized everywhere as a store of value. Whether it is Asia, Europe, or North America, gold is valuable and the best protector against economic crisis.
The time is right now to invest in gold
While predicting stock market crashes is not easy, gold is a sound investment opportunity for hedging against economic uncertainty. Most experts believe that ongoing geopolitical tensions, inflationary pressures, and excessive debt may cause future stock market declines and make the metal a sound asset to consider.
We stock a wide variety of gold bullion items ranging from 1-gram bars through to 1-kilogram bars and coins, competitively priced. Whether you want to add diversity to your investment portfolio or simply protect your assets against uncertain economic conditions, investing in gold can provide peace of mind and financial security.
Final Thoughts
When stock markets crash, panic sets in but seasoned investors know the wisdom of diversification. Time and time again, gold has proven itself as a sound asset whose value does not dwindle during moments of crisis. If you are contemplating adding gold to your investment strategy, AU Bullion is where you would find the best prices for gold bullion. Call AU Bullion today and invest in gold and secure your financial future.
