As I unfortunately had to write several times in the past few days, the share prices are extremely weak. The corona fear, the interest rate cuts and the permanent false reports or false estimates by countless “advisors” are responsible for the development. Yesterday I wrote about bonds here. Stay away from it.
Today I see “gold” as a deposit protection – that’s a lot better. The past 20 years have shown the return that gold can currently create. “Currently” is a limitation, because over more than a century the gold price has not looked as good as in the past 20 years. Because times have changed: Gold has long been a safe haven for central banks.
In any case, gold has brought 9.5% p.a. in the past 20 years. Or rather: the gold price brought this return. Warren Buffett rightly keeps pointing out that gold doesn’t produce anything. Gold does not produce anything and cannot contribute to real added value in the world. But the exchange value increases in view of the alternatives: electronic money and paper money that can be produced in any way will tend to lose more and more value.
However, if the gold price averages 9.5% p.a. is rising, then that’s a promise that I wouldn’t quite sign. Conversely, this means that the dollar would lose almost 10% of its purchasing power against gold every year. Will this remain so? If interest rates rise one day, the relationship will no longer be as dramatic. Therefore, I would not use gold as the big promise of return, but as a simple hedge.