“There are no simple answers for the investment community,” says Australia’s sovereign wealth fund, which recently announced its first gold purchases ever. “Traditional approaches have delivered strongly, but it is doubtful they are fit for the purpose in the future… In this kind of environment, there is a real risk of simultaneous slow growth, high unemployment, and rising prices that has some parallels with the stagflationary period that struck developed markets in the 1970s.” The fund questions the effectiveness of the traditional 60/40 portfolio, arguing that an investment shift is necessary to counteract a time of war, inflation and climate change.
Kosares writes: “Investors worldwide rush to gold coins as hedge for the times.”
As economic conditions deteriorate around the world and inflation accelerates, people are turning to gold at attention-grabbing levels—an indication that the metal has not lost its standing as the favoured asset of last resort.
Egyptians are hoarding gold as the purchasing power of their currency plummets. In Pakistan, gold is being pushed to record levels on aggressive investor buying to hedge a possible financial system breakdown. The World Gold Council reports similarly strong demand in other emerging countries, Europe and the United States.
“Demand for gold has never been as high as this year,” says Gerhard Starsich of the Austrian Mint. “At the moment, every gold coin that comes off the coining press has already been sold. Right now, we could sell three times as many as we are able to produce.”