Gold, one of the oldest known metals, was revered by all the great ancient civilisations and the first gold coins were minted as far back as 550BC.
Relatively scarce and notoriously difficult to produce, gold has been widely used both as a store of value and as an adornment throughout history. Today, however, it often divides opinion – at least among investors.
Compared to valuing a company or a bond, with gold there is relatively little to work with. Analysing the “fundamentals” of it is tough, when some investors argue there are none; it has no true intrinsic value, no cashflow, no earnings, no coupon and no yield, say gold sceptics.
But gold is undeniably affected by global macroeconomic factors. Although the prospects of rising interest rates is normally bad for gold, as it is a non-yielding asset, with inflation picking up and the focus on political risk increasing, gold bugs (investors who are bullish on gold) are back.
What’s happened to the gold price recently?
It had been a pleasant 2016 for gold investors until August. After a steep climb from around $1050 to $1360, the price of the precious metal started to fall and by December was back at around $1130.
For gold bugs this was a chance to top up their holdings. Since then gold has been on the rise once again and at the time of writing is back at $1259.
Source: Shroders
