A financial whirlwind is sweeping the globe.
It’s rocking economies (the UK prime minister resigned after 45 days) and stirring up the markets (we are in a bear market).
The stock market is bouncing like a cork on a stormy sea. Violent economic winds are ripping apart the bond market. And the gasping real estate market is sinking.
And then, there’s “boring” ol’ gold.
Yes, it’s true — gold tends not to be quite as dramatic, volatile, and action-packed as many other assets often are. It rarely swings hundreds of dollars in a matter of hours.
And it has never crashed to zero.
But that’s the whole point:
Owning gold is “boring” on purpose
Gold tends to be less volatile than many other assets. It tends to hold steady in choppy economic waters. And historically, it offers a financial anchor when traditional markets are swirling in chaos.
Take a look at the chart below. As you can see, gold (the orange line) tends to remain calm when stocks (the blue line) are volatile:
When the pandemic hit the US in early 2020, the stock market went haywire. Yet, gold remained steadier by contrast.
And here’s how volatile Bitcoin (the blue lines) has behaved relative to gold (the yellow lines):
Bitcoin is another very volatile asset. Its price has skyrocketed or dropped thousands of dollars in a matter of hours.
And true to form, the market’s enthusiasm for Bitcoin drove its price above $64,000 in 2021.
But today, “the king of cryptocurrencies” is worth around $17,000.
For traditional paper and digital asset investors who enjoy that much excitement, it’s been quite the year. But for more risk-averse folks, gold can act as a hedge in uncertain times.
But when we say gold, we mean the “real McCoy.” The only gold that matters: physical gold.
No one can “spoof” physical gold
“Spoofing” means a trader places an order and then immediately cancels it. This gives the market false impressions of high demand or supply. And it’s a scam.
Yet, it happens far more often than some people might believe.
In fact, just this August, a Chicago court convicted two former JP Morgan employees of spoofing, fraud, and attempted market manipulation in the precious metals futures’ markets, which impact the “spot” price of gold.
The currency and crypto markets are also rife with criminal activity like this.
For instance, scammers exploited a security flaw in the crypto exchange Coinbase to steal tens of millions of dollars. A hacker robbed Binance, the world’s largest crypto exchange, to the tune of $570 million in crypto. And the risk of losing it all to cybercriminals like this is still very real for crypto holders.
Those stories of rollercoaster price changes and high-risk failures may seem “exciting.” And physical gold may seem boring by comparison. But knowing criminals can’t hack or manipulate “boring”” ol’ gold is part of why it’s so attractive right now.
As Nobel Prize–winning economist Paul Samuelson once said, “Investing should be dull. It shouldn’t be exciting. Investing should be more like watching paint dry or grass grow.”
This is why thousands of Americans are shifting a portion of their savings into gold right now. Because they know, next to investing in stocks, real estate, and crypto, owning physical gold may seem “boring” … But owning gold may offer all the rewards they need.