Gold as a Safe Haven
Our financial system is more interconnected than ever before. This increases systemic risk, making gold an attractive option for those seeking protection.
The financial crisis of 2007-2008 became a global systemic problem. Governments and central banks intervened, injecting trillions of dollars into a strained system. In doing so, they blurred the line between government and banking institutions, leading to further instability.
Why Gold Holds Value
Gold cannot go bankrupt. While its value fluctuates, it consistently retains value due to its scarcity. Historically, gold has held its real value over centuries. Investors use it as a safeguard against systemic risks such as international crises or a systemic crash.
Moreover, gold brings much-needed diversification to investor portfolios. Its low correlation with major currencies and strong inverse correlation with the US dollar make it a crucial component of a diversified portfolio.
