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In today’s volatile financial landscape, investors are increasingly looking for stability, and gold is emerging as one of the top choices. As the world grapples with rising government debt, geopolitical instability, and shaken confidence in traditional markets, tangible assets like gold offer a secure alternative. Here at De Pointe Research, we have been observing and researching these trends closely, and I’d like to share our thoughts on why gold is worth considering as part of your investment portfolio.

The Current Gold Investment Landscape

In recent years, we’ve seen growing interest in alternative investments, particularly in tangible assets like gold and art. Our attendance at industry events, such as the Master Investor Show, allows us to engage with thousands of investors and track market sentiment. Back in early 2024, only 16% of those we surveyed expressed interest in gold investments, but recent developments have changed that picture dramatically.

Several global factors contribute to this renewed interest. The Russo-Ukrainian war, tensions in the Middle East, and soaring national debts in the UK and US (at 100% and 120% of GDP, respectively) have investors concerned about the safety of traditional financial markets. This heightened uncertainty is driving more investors toward gold, which has long been seen as a hedge against market instability.

Why Gold is Ascending Right Now

The resurgence of gold as a sought-after asset stems from a basic economic principle: supply and demand. Gold, being a finite resource, sees its value rise when demand grows faster than supply. We saw this dynamic play out in 2008, following the Lehman Brothers collapse when gold hit an all-time high.

The current geopolitical and economic climate is fostering similar conditions. Government debt, shaky investor confidence, and even retail investors seeking stability are pushing gold prices up. What makes gold particularly appealing is the sense of security it provides—physically owning an asset that can be safely stored is emotionally reassuring in times of uncertainty.

Pros and Cons of Investing in Gold

While gold is gaining popularity, weighing the pros and cons before investing is essential.

Pros:

• Portfolio Diversification and Stability: Gold’s lack of correlation with traditional markets makes it an excellent hedge against volatility. It’s a reliable store of value during times of financial and geopolitical uncertainty.
• Tax Benefits for UK Investors: In the UK, gold investments offer notable tax advantages. Gold bullion is exempt from VAT, and legal tender coins like Britannias or Sovereigns are also exempt from Capital Gains Tax (CGT). With potential CGT increases in upcoming budget announcements, these benefits are particularly appealing.

Cons:

• No Income Generation: Unlike stocks or bonds, gold does not generate income. Investors only profit through capital appreciation.
• Storage Costs: Securely storing gold comes with its own set of expenses. For example, vaulting services charge 0.1-1% of your gold’s value, while safety deposit boxes range from £100 to £500 per year. Home storage may require additional insurance, which typically costs £1-2 per £100 of gold insured.

Ideal Gold Allocation in Your Portfolio

At De Pointe Research, we advocate that 15-30% of an investor’s portfolio be allocated to alternative assets, depending on individual circumstances. Gold, due to its stability and non-correlation to traditional markets, can play a significant role in providing that anchor for your portfolio.

As geopolitical instability and economic concerns mount, allocating up to 30% of your portfolio to gold can offer both diversification and protection. While every investor’s strategy will differ, those looking for safety in today’s climate should seriously consider gold as a safe haven.

Gold remains a timeless and trusted store of value, especially in periods of heightened risk. As interest in this tangible asset grows, so too does its potential to provide stability to an investor’s portfolio. Whether you’re looking to safeguard your investments from market volatility or benefit from tax advantages, now is a crucial time to consider adding gold to your investment strategy.

At De Pointe Research, we continue to monitor the gold market closely, ensuring that our insights help investors make informed decisions. If you’d like to learn more about how gold can fit into your portfolio or need assistance navigating the alternative investment space, please reach out to our official Gold Partners, Solomon Global by filling in the form below.