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The Timeless Forces Behind Gold’s Enduring Value

Gold has captivated civilisations for millennia, symbolising wealth, stability, and security. While today’s headlines highlight gold’s latest bull run and highs, history reveals a deeper story shaped by recurring global factors and forces. Unlike stocks or fiat currencies, gold is not just an investment. It is a historical constant and remains a steady and reliable asset, one that thrives during economic, geopolitical and financial uncertainty. Here are some reasons why gold remains one of the most enduring stores of value in history. Economic uncertainty: A hedge against inflation and instability Gold has long been a go-to asset when economies falter. Throughout history, periods of high inflation, recessions, sluggish growth and financial crises have driven investors towards gold as a safe haven. Unlike paper money, which central banks can print whenever they feel like it, the finite supply of gold ensures inflation does not erode its value over time. This scarcity and intrinsic value make it appealing as a stable store of value during inflationary periods.

During the UK’s 1970s stagflation era, gold soared as inflation skyrocketed (reaching over 25%) and economic growth stalled. Rising oil prices, which tripled during the 1970s, and rising wages were the main inflation culprits.

The 2008 financial crisis saw gold surge as markets collapsed and central banks flooded the system with liquidity. Lasting from December 2007 to June 2009, the period also known as the Great Recession saw the precious metal rise around 50% in dollar terms.
Pandemic-driven uncertainty and the rise of government debt in 2020 reinforced gold’s role as a stabilising asset; the metal rose significantly as fiscal stimulus packages were revealed. August of the same year saw global demand for gold spike, and the price hit a record high of £1,550 per troy ounce ($2,030). The Royal Mint reported that gold was the best performer of the three asset classes (stocks, bonds and gold) in 2020.

Geopolitical turmoil: Gold as a crisis asset Wars, conflicts and global tensions have repeatedly driven demand for gold throughout history. It is a borderless asset and immune to political shifts and currency devaluations. In its research note of October 2024, Asset Allocation Implications in Today’s Chaotic World, The World Gold Council concluded that: “…gold is an ideal hedge against unpredictable geopolitical shocks. This is further evidenced in our 2024 Central Bank Gold Survey, which revealed that geopolitical risk was a key driver that spurred on central banks in their recent record-breaking gold purchases.” When uncertainty looms, gold provides a universal hedge—one that governments, institutions, and individual investors alike turn to in times of crisis. Central banks and the power of gold reserves Central banks have historically recognised gold’s role as a store of value. Over the past century, they have accumulated vast reserves to protect against financial instability and currency fluctuations. In fact, around one-fifth of all the gold ever mined is held by central banks, according to the World Gold Council. 2022 saw central banks purchasing gold at a record level (adding 1,082 tonnes). The following year saw them add 1,037 tonnes (the second-highest annual purchase in history). The gold-buying spree continued in 2024, with central banks bolstering their reserves with a further 1,045 tonnes. The latest reports suggest they remain bullish on bullion in 2025. Other reasons investors flock to gold

Currency devaluation

Fiat currency value is heavily influenced by government policies, interest rates and monetary supply. When central banks print excessive money to counter economic downturns, fears of inflation and currency devaluation rise—prompting investors to seek refuge in gold as a store of value.

Gold as part of a diversified portfolio

While stocks, bonds, and cryptocurrencies are a big part of modern investing, gold remains a crucial portfolio ‘stabiliser’. Its low correlation with equities means it often performs well during market downturns. Investors recognise gold as a core strategic asset that withstands market cycles and technological disruptions.

A tangible asset with intrinsic value

Unlike digital or paper-based assets, gold is a physical asset with intrinsic value; it cannot be hacked or erased. Gold’s scarcity and historical significance as a form of wealth preservation make it a trusted asset across generations and cultures. Why gold’s appeal endures The price of gold may fluctuate daily, but centuries of economic patterns have shaped its core value. Whether it is inflation, financial crises, war, or shifts in monetary policy, the forces driving gold remain as relevant today as they have always been. As history has shown, when uncertainty rises, gold remains the ultimate hedge—a tangible, universally recognised asset that has stood the test of time. Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Buying physical gold as an investment involves risk, as the value of precious metal prices can be volatile. Historical financial performance does not necessarily give a guide of future financial performance. We recommend that you conduct your own independent research and seek professional tax, legal and financial advice before making any investment decisions.

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