The 2000s have been a golden period for gold investors. The dollar value of the precious metal has increased by approximately 800 percent since January 2000, while both the S&P 500 index in the USA and the Stockholm Stock Exchange have increased by around 300 percent, a bit more if you include dividend payments. However, those who have invested in Sweden have missed out on the benefits of a stronger dollar, so in kronor, gold has increased even more.
Over the past three years, the gold price has risen by more than 40 percent, while the S&P 500 index has risen by around 26 percent.
One reason for the increase in gold is that debts in many countries have risen sharply, according to Christian Kopfer, a commodity analyst at Handelsbanken.
The debts of the really large economies have escalated. For example, the USA has never had such a high debt in relation to the size of the economy.
A high level of debt increases uncertainty about the economy and makes gold a "safer" investment.
"Warning signal"
Another reason is that countries have printed more money to boost economic growth, according to Kopfer.
If you look at the money supply in Europe and the USA, it has gone straight up.
This also benefits the gold price.
The currencies are becoming less valuable, and then gold becomes a protection against it, simply.
The increase has been reinforced by central banks buying a lot of gold in recent years.
And that the gold price has risen more than the stock market - suggests that something is wrong, according to Torbjörn Iwarson of the commodity fund Centaur Commodity Fund.
This is a real warning signal. A dead metal like gold has thus yielded better than ingenuity, intelligence, and hard work.
Continues to rise
According to Torbjörn Iwarson, this indicates low productivity and growth. And both he and Christian Kopfer believe that gold will continue to rise in price.
There is no limit to the budget deficit or national debt in the USA. It just keeps increasing, says Iwarson.
Christian Kopfer is on the same track. He believes that the gold price can rise from today's 2,500 dollars to 3,000 in a couple of years.
It's not entirely impossible. It has increased a couple of thousand dollars in value over 20 years.
He believes that gold can be a good investment, but adds that one should see it as a complement.
One must not forget that gold is a risky asset. For example, if there is a major shock to the economy, all asset classes usually take a big hit.
Karin Rader/TT
Facts: How to invest in gold
TTTT
Investment gold. Physical gold can be purchased in the form of coins and bars of various sizes on sites such as Guldcentralen, Tavex, and Guldcentrum. It requires secure storage and insurance.
Companies in the gold industry. Small investors can indirectly invest in gold by buying shares in, for example, mining companies or funds focused on gold companies. This provides some exposure to the gold price, but one must reckon with usual company risks and market fluctuations.
Stock market products that follow the gold price. Those who want a more direct exposure to gold can look at stock market products - such as certificates, ETFs, and ETCs with gold - that follow the gold price and also have actual gold bars as collateral.
Source: Avanza and Nordnet
