Gold is a precious metal with a long history and a historic importance to the global economy. As a metal, it has experienced tremendous price volatility throughout the years. Currently, gold prices are at an all-time high, reaching US$2,000 an ounce in June 2020. While the surge in gold prices is a boon for investors, the questions remain – is gold a buy at US$2,000 and if so, why?
First and foremost, gold is typically seen as a hedge against risk and is often described as a “safe haven” asset. Its value increases when stocks, currencies, and other investments fall in value, thereby decreasing the risk for investors. This is the chief reason why gold prices have soared during this period of economic volatility.
Moreover, gold has long been used as a form of currency and means of exchange. It has provided stability when other currencies declined and can be used as a store of value in a global economic downturn. Furthermore, gold is an inflation-proof asset and the digitalization of the global economy has led to an increased demand for gold as a safe-haven investment.
On the other hand, there are some potential risks to consider with gold. Firstly, gold prices can be volatile and susceptible to sharp swings due to market forces, geopolitical uncertainties, and government policies. Secondly, gold can carry a financial cost in terms of carrying, storage, and insurance costs.
At the end of the day, the decision to buy gold at US$2,000 per ounce depends on the individual investor’s goals and risk profile. For some, gold can provide a hedge against risk in uncertain times and offer an opportunity to diversify a portfolio. For others, gold may not be the right choice, given the potential risks and costs associated with the metal. It’s important for potential investors to weigh the pros and cons before investing in gold.