Asians turn to gold during pandemic - EasternEye

Asians turn to gold during pandemic


(Photo: Mario Tama/Getty Images).
(Photo: Mario Tama/Getty Images).

 



By Nadeem Badshah

GOLD has become a more attractive investment among British Asian families during the coronavirus pandemic, experts have revealed.

Investors have turned to jewellery and bars, despite the rising prices, due to stock markets being rocked by the economic impact of Covid-19 and the US election in November.



With the metal regarded as a secure long-term investment, experts have branded 2020 as the “gold rush year”.

Giles Coghlan, chief currency ana­lyst at trading firm HYCM, told East­ern Eye: “2020 has been a whirlwind year for investors. Yet, even amid a global pandemic, the performance of some assets has been nothing short of impressive; this is very much the case when it comes to gold.

“The spot price of gold has in­creased by over 32 per cent since the beginning of the year, breaking the $2,000 (£1,544) mark. Perhaps, more astounding is gold prices are continu­ing to rise and could reach $2,500 per ounce by the end of the year.



“Investors look to tangible assets as a means of protecting their wealth during times of uncertainty. As a re­sult, gold is considered a safe haven asset that is able to maintain and in­crease its value during volatile peri­ods. With Covid-19 still unresolved, not to mention big political events like the US presidential election and Brexit on the horizon, it seems inevi­table for gold prices to rise over the coming months.”

It comes after bulk buy specialist Costco began selling bars of gold in the UK for up to £24,500.

In late September, the store’s 100g bar was on sale for £4,939.99, when the market price for that much gold was £4,619.70. It also had a 500g bar at £24,549.99.



Jaffer Kapasi, director of the East Midlands Chamber of Commerce, said gold has cultural significance and is a traditional investment among Asian parents and grandparents.

He told Eastern Eye: “It is a safe in­vestment and is traditional, especial­ly during a time of financial uncertainty, high inflation, depreciating exchange rates and economic recession.

“Gold has an intrinsic value. A cur­rency like the dollar or pound sterling can depreciate in value, the value of the pound depends on the strength and stability of the UK economy.

“During a recession, gold is seen as a better investment than, say, the stock market as in a recession, typi­cally stocks will fall as companies make less profit. I feel the price of gold increased this year because peo­ple lost confidence in the value of government bonds and as the gov­ernment need to print more money to pop up the economy.”

Adam Vettese is an analyst at mul­ti-asset investment platform eToro which has offices in Cyprus, Israel and the UK.

He said: “Gold is a classic safe ha­ven investment that investors typi­cally flock to when global stock mar­kets are volatile or there is a lot of uncertainty surrounding the econo­my. That is often because gold is seen as a less risky investment; it tends to hold its value long-term, as there is always demand for it.”

Vettese added there are also some downsides to investing in the yellow metal. He said its price can be very volatile in the short-term, even though long-term it holds its value well. “Further, unlike a dividend pay­ing stock, gold does not give you a regular income.

“That said, many people believe it’s worth having a small amount of your portfolio allocated to safe haven assets like gold, but you should not put all of your eggs in one basket.”

Asma Choudhury, 30, is a finance worker in London.

She said: “The price of gold has been very high recently. Its value only gets higher and therefore it is a great investment. “Maybe people are turn­ing more to gold bars because the jewellery shops in Tooting are empty.

“But that could be down to wed­dings being postponed, so people are holding off buying jewellery for now.”



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