Gold as a solid investment: Rising gold price due to wars and inflation

Gold gilt für viele als solide Geldanlage, zumindest langfristig. Kurzfristig ging es in diesem Jahr schon stark nach oben bis über 2.050 Dollar pro Feinunze im Mai – und wieder stark abwärts bis auf 1.820 Dollar Anfang Oktober. Seit dem Israel-Gaza-Krieg geht es nun wieder steil aufwärts mit den Goldnotierungen.

Wars in Israel and Ukraine drive up gold prices

For example, anyone who has owned bars and coins for five years can look forward to an increase in value by around half - and even tax-free. In ten years, the price of gold has increased almost fivefold, so that a tiny 50 gram bar of the precious metal is now worth around 3,000 euros. That seems like a lot and is currently due to developments in Ukraine and the Middle East. Can such a sensational course success be repeated in the long term?

Investing in gold: “The trend is your friend”

A certain proportion of investors, including professional investors in banks, tend to buy gold in times of crisis. Maybe they just do it with the confidence that others will do it too, and so the calculation seems to work for a while. “The trend is your friend” is the motto for investors who, above all, adjust to the herd behavior of others and, if possible, follow the price development on the broad market.

Gold price also fluctuates due to exchange rate risk

It also plays a role for the price of gold whether there will be further interest rate increases that would affect the exchange rate of the US dollar. Seen from this point of view, the price of gold is currently being driven by a number of special factors, which makes it particularly susceptible to fluctuations. Since we live in a Euro country and account for our assets accordingly, there is always an exchange rate risk when purchasing the precious metal, which is traded in dollars on the key markets.

Gold as protection against high inflation

Currently, both the European Central Bank and the US Federal Reserve are expected to pause interest rates. When looking at the stock markets, the associated inflation expectations are also taken into account. So if inflation is particularly high and interest rates rise sooner or later, this is an interesting environment for gold investors. Many people traditionally buy gold as protection against high inflation.

On the other hand, in times of high interest rates, bonds generate significant returns again, which is something that bars and coins do not, as they always bear no interest. However, the distribution of dividends on stocks or the annual interest payments on bonds and bank deposits are significant over a longer period of time.

Gold is also attractive for central banks

China, Russia and other important emerging countries in particular have been increasingly buying gold bars in recent years to use them as currency reserves. For them, gold quoted in dollars is more neutral than buying US government bonds. For example, the gold is intended to make the BRICS countries (Brazil, Russia, India, China and South Africa) more independent from the US's access to power, which can otherwise put other countries such as Iran under pressure with its SWIFT payment system.

In the worst case, even the gold doesn't help much

If there really is a massive collapse of currencies due to a major global economic crisis, which might also affect the dollar, then gold will no longer be of much help. In Germany it is banned as a means of payment by the Bundesbank and may not be accepted by sellers, for example. The question then arises as to how one wanted to pay the exact amounts with bars or coins without falling into a barter economy. And finally, it should also be borne in mind that the US government has already banned private gold ownership in order to simply confiscate the precious metal for the state. This ban was announced by US President Franklin D. Roosevelt in 1933 and is considered the best-known case of its kind.

Conclusion: Gold can bridge crises, but investors should spread the risk

The conclusion would be that gold can make sense to bridge a crisis in securities and currencies. You can also use it to spread the risks in your portfolio if you already have other forms of investment. On the other hand, it seems too risky to bet everything on gold because of the historically high price fluctuations. For the practical and, not least, legal reasons mentioned, it does not appear to be suitable as a complete replacement for cash or book money.

The price of gold has risen and fallen sharply in the short term, but has risen sharply again since the Israel-Gaza war. The price of gold can be influenced by various factors, including geopolitical crises such as those in Ukraine and the Middle East. In addition, the exchange rate risk plays a role, as gold trading takes place in dollars, while in Europe settlement is made in the euro. Gold can also serve as a hedge against high inflation, as it is often purchased as a hedge during times of high inflation. Nevertheless, gold also carries risks due to its historically high price fluctuations, so diversifying the portfolio is recommended. In addition, central banks such as China, Russia and other emerging countries are increasingly purchasing gold bars as currency reserves.

Die steigenden Goldpreise könnten dazu führen, dass mehr Investoren und Anleger Gold als Geldanlage in Betracht ziehen. Dies könnte zu einer erhöhten Nachfrage nach Gold führen und den Preis weiter in die Höhe treiben. Gleichzeitig könnten geopolitische Unsicherheiten, wie der Konflikt in der Ukraine oder im Nahen Osten, zu einer verstärkten Nachfrage nach Gold als sicherem Hafen führen. Das Wechselkurs-Risiko könnte jedoch auch zu erhöhten Schwankungen des Goldpreises führen.

The increasing demand for gold could also impact the financial industry, particularly companies involved in trading gold bars and coins, as well as gold exchanges. These companies could benefit from increased demand and generate higher profits. At the same time, however, they could also be exposed to increased risk, as fluctuations and uncertainties can influence the gold market.

Es ist schwer, die genauen Auswirkungen auf den Markt oder die Finanzbranche vorherzusagen, da dies von vielen Faktoren abhängt. Jedoch könnte eine erhöhte Nachfrage nach Gold zu einem Anstieg des Goldpreises führen, was positive Effekte für Unternehmen haben könnte, die mit Gold handeln. Die gestiegenen Preise könnten jedoch auch zu verstärkten Schwankungen und Unsicherheiten führen, was sowohl Chancen als auch Risiken birgt.