Select Page

The World Gold Council says the fact that many households have been able to save money during the pandemic could be an additional strengthening factor and source of demand for gold.

EMEA Senior Analyst Krishan Gopal says research calculates that globally, an additional £3.88 trillion ($5.4 trillion) has been squirreled away by savers– something that many expect to see converted into elevated levels of consumer spending once restrictions lift and life returns to normal.

Gopal says that consumer spending can actually benefit gold, and can provide additional sources of demand, bolstering the precious metal.

He said, “Some might think that a wave of consumer spending, propelling economic growth higher can only be negative for an asset considered a hedge against financial turmoil. But, while risk and uncertainty may be lower, the potential impact on gold is a little more nuanced than some investors might realise.

“Gold’s different sources of demand, and how they impact gold’s behaviour, are key to understanding its diversification benefits. Jewellery and technology demand can benefit from higher discretionary spending. Far from being negative, economic expansion is a positive force on certain elements of gold demand.

Investment demand might also be supported despite lower uncertainty. While the counter-cyclical portion of investment demand – that linked to risk and uncertainty – may decline due to the more positive economic outlook, an element of investment might benefit from this higher level of savings. Consumers, aware that they are facing ultra-low or negative interest rates on their savings and the prospect of inflation, may opt to convert some of this into gold as it is a proven store of value. Again, there has already been evidence of this during Q1, with record levels of demand for gold coins from both the US and Perth Mint.”

Disclosure
This website is published by The Gold Safe Ltd, a Company registered in England and Wales with Company number: 11994725 a subsidiary of the United Kingdom Asset Company Ltd, a Company registered in England and Wales with Company number: 09784057 and is intended for information and promotional purposes only. The information provided in our free guide is not intended as an offer to invest and should not be construed as financial advice.

Fees: There are no fees for using this website or service.

Contact us: Tel: 0203 695 3400
Web: www.thegoldsafe.co.uk
Email: admin@thegoldsafe.co.uk

Address: 71-75 Shelton Street, Covent Garden, London WC2H 9JQ

All rights reserved copyright 2020 The Gold Safe Ltd

Follow us on:

    Wait! Before You Leave Download The 'Ultimate Guide to Gold Investing'
    FREE of Charge