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Gold £1357.06 £43.631
Silver £18.669 £0.6002

Updated 07:20 20/01/21

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Top 5 Reasons to Buy Gold Right Now


1) Brexit

Brexit Financial market volatility is currently extremely high. Despite this being dangerous for most asset classes, gold tends to thrive in these circumstances. Gold is famous for its popularity in times of economic instability and 2016 certainly fits that description. Britain's recent decision to quit the EU has had a damaging effect on the value of the British currency, pushing up the value of gold in sterling. Furthermore, the uncertainty about the future has damaged confidence in the British economy, leading investors to look for safe-haven assets that are more likely to withstand future crises. Interest rates are low, banks are holding unconquerable amounts of debt and markets are extremely volatile. Unsurprisingly, investors are losing faith in the financial system and are looking for alternative methods of protecting their wealth. In increasing numbers, people are turning to tried and trusted assets such as gold.

2) Rising Geopolitical Tension

Gold’s rising value since the start of the year is undoubtedly connected to the poor performance of the global economy and the growing uncertainty and pessimism about its future. As well as economic instability, rising geopolitical tension is having a positive impact on the value of gold. States and governments are growing increasingly concerned with security and, inevitably, this has had an impact on investor confidence. Rising tensions across the globe are leaving investors and governments on edge. Britain’s recent referendum decision to leave the European Union highlights the growing disaffection for the current state of affairs and it is very possible that other states will follow suit in the future. The collapse of the EU could wreak havoc with the global economy should the major economies propping up the ECB pull out, the consequences could be catastrophic.

3) Donald Trump

Donald Trump Trump's emergence as a serious candidate for US President has had an unsettling effect on the world. Many of the claims he has made for his potential presidency seem likely to exacerbate an already tense geopolitical climate. Most significantly, Trump has made a number of claims that indicate his fondness for gold and, should he win the election, gold investors could be set to benefit. Trump’s plan to devalue the dollar to improve US exports could push up the value of gold. In the worst case scenario, should Trump’s policies weaken the US economy, safe haven demand in the US would certainly push up the gold price.

4) Negative Interest Rates?

Negative interest rates are becoming a more common feature of the global banking system, and the Bank of England's decision to cut UK rates for the first time in seven years has seen British banks move a step closer towards this territory. When saving money becomes an expense, investors looking to protect their wealth may fail to see the benefits of a system that offers little to no incentive to use it. Unsurprisingly, investors are losing faith in the financial system and are looking for alternative methods of protecting their wealth. Furthermore, with banks seemingly edging us closer to a cashless society all the time, investors may view gold as their best option for a compact, liquid physical asset.

5) Investment Demand for Gold Is at a Record High

Gold Bull Market The precious metal is up by around 45% in 2016 and is currently nearing the heights it famously reached in 2011. Whether or not gold continues to rise remains to be seen, but there is plenty of reason to suggest that this could continue for a while. Brexit has undoubtedly boosted this bull market in Britain, with the devaluation of the pound and increased safe haven demand causing the gold price to soar in recent months. A recent report from the World Gold Council clearly supports this – investor demand for gold is at a record high, with 1,064 tonnes sold for investment in the first half of 2016, 16% higher than in 2009 when the previous record was set. Given recent extensions to interest rate cuts and quantitative easing, with more expected in the future, it would not be surprising if this continues.

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