Why investors should go for gold in 2018
Amid the political and economical uncertainty dominating all over the world, in the times when distressing economic news have become commonplace and people are simply expecting the next financial crises, many do wonder whether gold still makes a good investment. If answering the question as concisely as possible, the answer is strongly affirmative. Gold has proved to be a safe haven for investments. There are various solid reasons as to why this lustrous yellow metal is in the financial spotlight.
Strong global demand is one of the crucial factors why the gold market should be invested into and prioritized. There has been noted a strong demand for gold during 2017. Gold is gradually building its momentum. The largest gold consumer during the year of 2017 was China, where the demand for gold bars increased with 40% in November. No. 2 global consumer of gold is India, where gold imports skyrocketed up to 67% in 2017. India and China alone represent about 50% of the global gold consumption. Asia, in its turn, is demonstrating a recovery in the physical demand for gold. Physical gold demand is a critical component to consider while forecasting future price movements. Such an upward trajectory is predicted to remain intact in the nearest future.
Investors are also worried by the weak production of gold. 2017 has been quite an anemic year, as gold output was at the lowest point since the financial crisis. Most of the investors consider this as a great risk and are reluctant towards investing into the gold market. During the first three quarters of 2017 gold output decreased by 3.76% compared with 2016. 2017 resulted in the total of 374,981 tonnes of gold production.
Given the data on demand and supply, it is necessary to consider that the less gold is coming out of ground, the more valuable the existing market is, consequently, the more gold investors will benefit. The rise in the global demand for gold along with the finite supply, supports gold as an inflation hedge and wealth protector.
Another major concern that puts the value of gold under a doubt is cryptocurrency. Various analysts assume that the crypto craze drastically weakens the demand for gold. On the first place, prior to making a decision on a better investment, take into account the fact that that gold is a reliable and physically accessible material, whereas bitcoins are digital currency subject to radical fluctuations. Furthermore, bitcoin is decentralized and is not regulated by any bank. The nature of this digital currency is inconsistent and contradictory: it is an experimental unit, and you should not invest more than you are actually capable of losing. Hence, as opposed to bitcoins, gold has maintained a strong intrinsic value and in no way the crypto craze is capable of downplaying the demand for gold.
So, we are witnessing how 2018 slowly but gradually is leading to a gold breakout. Many people hesitate and wonder whether gold is a stable unit to invest into. Gold itself is quite speculative, as it can have both high peaks and low valleys. Nevertheless, as illustrated, many favorable factors, such as growth in the global demand, scarcity of the metal, uncertainty of crypto craze, are leading to the increase of the value of gold turning into both a safe haven and an irreplaceable direct investment.