Why is gold a great investment asset?

Gold is widely found in nature, with global proven reserves estimated at around 100,000 tons. These reserves are primarily concentrated in 14 countries, including South Africa, Russia, and China. South Africa holds the largest share, with approximately 31,000 tons, accounting for 31% of the world's total gold resources.

Although gold is no longer used as a medium of exchange, a unit of account, or a standard for pricing goods and services, it still retains its function as a store of value. As such, modern gold fulfills only one of the three primary functions of money, and thus can no longer be considered currency in the traditional sense. However, its monetary role has not entirely disappeared. In many countries, including major Western nations, gold continues to hold significant importance in international reserves.

Gold’s rarity makes it exceptionally valuable, and its stability makes it easy to preserve, making it an essential means for storing wealth. Additionally, gold is a financial asset with inherent value that never defaults. Fundamentally, gold provides protection against credit risk. In times of systemic financial instability or even government bond crises, people often turn to gold as the most reliable asset for preserving value. Gold serves as both a safe-haven asset and a stabilizing force.

Since the 21st century, events such as the U.S. subprime mortgage crisis and the European debt crisis have slowed or even stalled economic growth in major Western countries. Due to its unique safe-haven properties, gold has been highly sought after during such periods, with international gold prices once surging above $1,900 per ounce. Gold’s low correlation with assets such as stocks, real estate, and bonds makes it an excellent choice for diversifying risk and optimizing investment portfolios.

Gold price trends in Malaysia over the past 10 years

Gold is often regarded as one of the most reliable investment options. Here are the key reasons why it stands out:

1. Safe Haven and Wealth Preservation

Gold is widely seen as a safe-haven asset, especially during periods of global economic turmoil, currency depreciation, or political instability. Its unique status attracts capital inflows during uncertain times, driving its price higher and helping investors preserve and grow their wealth.

2. Stable Investment Value

The value of gold remains relatively stable and is less affected by factors like inflation. With a limited supply, gold has strong inflation-resistant properties, and its value often rises alongside inflation, making it a dependable store of value.

3. Flexible Trading

Gold operates within a global market, allowing investors to trade at any time. Unlike some other investments, gold has no restrictions on trading hours. Its high liquidity ensures that investors can buy or sell gold as needed, making it a flexible option for asset allocation.

4. Ideal for Long-Term Investment

Gold is often viewed as a long-term investment tool, suitable for asset allocation and financial planning. Over the long term, gold prices generally show an upward trend. While short-term price fluctuations occur, gold typically appreciates during economic downturns or financial crises.

5. Portfolio Diversification

Gold is an excellent addition to a diversified investment portfolio due to its low correlation with other asset classes. Including gold in a portfolio can help reduce overall risk and enhance its stability, especially during market volatility.

6. High Global Recognition

Gold is universally recognized and accepted as a valuable asset. Investors can easily exchange gold for other currencies or goods, making it a highly flexible and liquid investment option with global appeal.

Points to Consider

While gold offers many advantages, it is not entirely risk-free. Investors should thoroughly understand market conditions, price fluctuations, and other factors before investing in gold. Decisions should be based on individual risk tolerance and investment objectives.

Kedai Emas Sri Berlian offers a variety of 999 PAMP Suisse gold bar, and also 999 Pure Gold and 916 Gold jewellery collections with timeless and modern styles to suit any occasion.

Explore the finest gold pieces for you by browsing our jewellery online or scheduling a visit to our physical store!

We look forward to serving you!