Why Should You Invest in Gold?

Analysts see upside for gold prices, given our bullish long-term outlook for jewellery demand in China and India, and believe it is a viable safe-haven asset

Kristoffer Inton 17 August, 2018 | 7:36AM
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Gold has many uses, including jewellery, electronics, and investment, the key reason it checks out as a positive for functional purpose in our safe-haven framework. Nearly 40% of gold demand is related to investment purposes, including bars and coins, central bank purchases, and exchange-traded funds. Theoretically, this portion of demand could be under threat to be displaced by cryptocurrency.

Nearly 40% of Gold Demand Could Theoretically Be Under Threat by Cryptocurrency

Accounting for more than 50%, jewellery is the single-largest individual source of demand, shown in Exhibit 10 by country. After a 21% drop in demand in 2016 amid challenges in its two largest markets, China and India, 2017 demand stabilised in China while India returned to growth. This helped global jewellery demand recover 13% to 2,214 tonnes in 2017. Nevertheless, this remains about 400 tonnes below the average from 2013 to 2015.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Kristoffer Inton  is an Equity Analyst for Morningstar