Today, the FTSE is plummeting once again, and stock markets around the world are facing a similar fate. In this chaotic environment, many investors are turning to gold as a safe haven, hoping to protect their wealth from the impending market downturn. However, is gold truly a reliable asset class, or is it just a fleeting trend?

With its rich history dating back over 4,000 years, gold has long been regarded as a store of value. Its value has been steadily increasing over the years, and it has consistently proven to be a reliable hedge against inflation and economic uncertainty.

Some investors are now piling into gold in a desperate bid to protect their wealth, driven by the current market turmoil caused by Donald Trump’s tariff war. The gold price has smashed through record highs, reaching a new high of $3,167 (£2,436) an ounce last week.

According to experts, the gold price has risen 16% so far this year, and 27% in 2024. This significant growth is attributed to the increasing demand for gold as investors seek safe-haven assets during times of economic uncertainty.

However, despite the current surge in gold prices, experts are urging caution. The price has retreated from recent highs, and it could crash back to earth if the panic eases and the market stabilizes.

One expert, Rick Kanda, managing director at The Gold Bullion Company, notes that the current situation has made physical gold more attractive than rival safe-haven assets such as cash. “This is causing logistical challenges and buyers are worried about the gold shortages this might cause,” he said.

BullionVault, a leading gold marketplace, is experiencing its busiest days since Brexit and Trump’s first election win, with a single customer spending £1.5 million on gold via their smartphone app on Sunday. The company’s director of research, Adrian Ash, attributes this surge in demand to the increasing popularity of physical gold as a safe-haven asset.

Ash warns that gold is not a foolproof investment, and it can still fall in value if the market continues to decline. “If the plunge in risk assets continues, there’s a chance gold will fall too, as traders sell winners to cover losses elsewhere,” he said.

However, Ash also notes that the current market environment may drive even more people to buy and hold gold for the long haul. “Like the financial crisis and Covid crashes, that may just drive even more people to buy and hold gold for the long haul,” he said.

Some experts, such as Jason Hollands, managing director at Evelyn Partners, are urging equity investors to avoid panic-selling shares and instead focus on diversifying their portfolios. “We see time and again that economic shocks hit markets short-term but they recover in the medium to long term,” Hollands said.

Hollands advises investors to maintain a diversified portfolio, including some gold, but also defensive stocks, cash, property, and government bonds. “It’s easy to want to switch to’safe’ assets like gold when your portfolio’s in the red, but that’s often not the best move,” he said.

Another expert, Matt Britzman, senior equity analyst at Hargreaves Lansdown, cautions that the current market environment is volatile and unpredictable. “Trump isn’t backing down, and volatility is the only certainty right now,” Britzman said.

Britzman advises investors to stay focused and avoid getting swept up in the panic. “Keep calm, think long-term, and resist getting swept up in the panic. History rewards those who stay the course,” he said.

Volatility in Gold: A Double-Edged Sword

• Gold has been highly volatile in the past, despite its reputation as a store of value.
• What goes up in a frenzy can just as quickly fall when the dust settles.
• The current surge in gold prices may be a short-term phenomenon, but it’s essential to consider the long-term implications.
• Investors should think twice before piling into gold during times of market uncertainty.

Gold’s Historical Performance

Gold has consistently proven to be a reliable hedge against inflation and economic uncertainty, but its price has been volatile in the past. It’s essential to consider the historical performance of gold and the potential risks associated with investing in it.

Expert Opinions: To Invest or Not to Invest

“Gold is not a foolproof investment, and it can still fall in value if the market continues to decline. However, the current market environment may drive even more people to buy and hold gold for the long haul.” – Adrian Ash, BullionVault

Investment Options

1. Physical Gold: Investing in physical gold, such as gold coins or bars, can provide a tangible asset that can be held onto for the long term.
2. Gold ETFs: Investing in gold ETFs can provide a more liquid and convenient way to invest in gold.
3. Gold Mining Stocks: Investing in gold mining stocks can provide exposure to the gold market, but it comes with higher risks.

Ultimately, the decision to invest in gold or not should be based on individual circumstances and investment goals. It’s essential to do thorough research and consider multiple options before making a decision.

As investors navigate the current market uncertainty, it’s crucial to stay informed and adapt to changing circumstances.