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.”