Rising inflation : a catalyst for gold demand ?

The 07/06/2024 in "Financial news"

For decades, gold has embodied wealth and financial stability. Unlike other assets, the gold rate has shown remarkable resilience in the face of economic crises.
 
Following massive investment to tackle the pandemic and a major geopolitical crisis centred on the conflict in Ukraine, Europe is facing major inflation.
 
Against this stunning of rising inflation and the erosion of the value of many investments, the official price of gold stands out for its astonishing durability. Explore why gold remains a safe haven in times of economic uncertainty, and why it is a profitable investment when prices rise.

Inflation and its effects on the financial markets

Inflation, characterised by a generalised increase in prices, is an inevitable phenomenon of our time. Several factors explain this trend in the current economic climate.

The first is the growing demand for gold. This is growing in most production sectors as a result of wars, rising living standards and local economic crises.

The second reason for this upward trend in a difficult environment is the rise in the production costs of the commodities most in demand : raw materials, oil, energy, etc.

The third reason for this inflation is none other than rapid monetary expansion. The amount of money in circulation is increasing excessively and shows no sign of stopping.

The consequences of this inflation are devastating for the economies of many countries. The majority of popular investments, such as property, shares and life insurance, are pegged to the dollar. As a result, these investments are becoming increasingly risky.

Historically, countries held reserves in dollars. However, in the face of global currency erosion, they have changed their strategy by looking for safer havens. Against this difficult backdrop, the price of gold continues to evolve and to stand out as a durable store of value.

 

 

Gold : a safe haven in times of economic fluctuations

Gold is a tangible asset, which means that its price does not depend on any institution, currency or issuer. When confidence in a country or a currency falls, the quotation of the yellow metal tends to rise.

Here are five advantages of gold as an investment asset :

  • Protection against inflation : the price of gold moves in real time with inflation
  • Increased value : the price of gold tends to rise when purchasing power falls
  • Diversification : gold is an excellent way for investors to diversify their assets
  • Liquidity : it's an asset that's easy to sell, providing quick access to cash when you need it
  • Growing demand : demand for gold is increasing due to global fears of currency devaluation and speculation by central banks, which are increasing their reserves.

In conclusion, gold stands out as a durable asset in times of inflation because of its stability, scarcity and power to preserve value. Its universal acceptance and historical performance as an economic safe-haven reinforce its appeal to investors seeking to protect their wealth against currency fluctuations. As a result, the yellow metal remains a preferred option for securing asset portfolios against inflation.

Godot & Fils : A company specialising in precious metals for over 90 years

If you want to buy physical gold or any other precious metal, Godot & Fils has been putting its experience and know-how at your service since 1933.

We provide you with professional and personalised support, based on our expertise in everything to do with the yellow metal.

Whether you want to increase your wealth or handle your transactions, we guarantee you the best prices for buying and selling gold, from the most extensive catalogue of coins, bars and ingots on the market.

Don't hesitate to discover our range of gold and silver coins and ingots on our website

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