Can Gold keep rising?
“What are the conditions for gold to become a safe-haven asset?”
It’s important to understand what you’re investing in during this gold investment boom.
Last year, the asset that attracted the most attention was gold. It experienced a surge that bordered on a skyrocketing trend, and many investors are now focusing their attention on gold and silver.
While some people view gold as a safe-haven asset, we must examine how we should classify gold as an asset.
“High price swings and limited trading in the market mean it doesn’t have the features of a safe-haven asset.”
For gold to become a safe-haven asset, it must resolve the issue of high price volatility. If gold priced at $250 per gram today suddenly drops to $200 tomorrow, no one would trust it as a reliable medium of exchange.
In other words, when transaction value risks exist, it is difficult to evaluate it as a safe-haven asset.
Realistically speaking, the US dollar remains a stronger safe-haven asset than gold. Consequently, individual investors can secure safe-haven assets by directly holding dollars or investing in US Treasury bonds.
Therefore, gold can be classified as an alternative investment asset.
Alternative investment assets include investable assets other than stocks and bonds. Real estate is a prime example, and other commodities such as gold, silver, oil, and natural gas are also included.
Recently, several investment YouTubers have claimed that the rise in gold prices stems from the political crisis in the United States. That is, they argue that the US dollar is losing its credibility as the world’s reserve currency.
However, the U.S. dollar remains an attractive currency, and there is no currency that can replace it. The U.S. dollar holds an overwhelming share not only as the global trade settlement currency but also as a reserve currency.
“Gold investment reviewed from an alternative investment perspective … Suitable as an asset allocation strategy investment”
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