There are several reasons why investors buy gold.
As a safe haven asset - during times of uncertainty, investors buy gold for the comfort of knowing that if currencies disappear and/or financial assets become worthless, at least they know their gold holdings would be worth something. Forget the challenges of storing this gold - it provides peace of mind and that, in and of itself, is worth a great deal to some.
As an inflation hedge - it has been well documented that gold is a good hedge against inflation. In fact, our analysis of data going back to 1971 confirms a strong positive correlation between gold and personal consumption expenditures (PCE). PCE is the primary measure of consumer spending on goods and services in the U.S. and since consumer spending accounts for almost 70% of US GDP, it is counted on as a measure of inflation.
As a piece of jewelry. - 'nuff said.
Which is why I am a bit confused by so many 2017 forecasts for gold prices to decline from current levels, in some cases dramatically. I guess I'm in the contrarian camp (Oh no, not again) because I think that if there is any risk in gold it is that it surprises to the upside.
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