It is times like these that I remember the reason we started “investing” in gold back in 1988. Over the years (many years) I have occasionally questioned the wisdom of investing in gold. After all, it has hardly been a spectacular investment over the 33 years we have had it.
But the reason we invested in gold was not to make a currency profit. It was with the memory of the oil price crash a few years earlier that had caused 70% unemployment in Aberdeen, my previous assigned location. So we started buying gold on a weekly basis at about $400 an ounce. The then Chancellor, in his infinite wisdom, decided after Big Bang in the markets that Britain didn’t need gold any more, and so started the decade drift in prices to about $250 an ounce.
Below is a link to an article by one of my favourite commentators on inflation - Mike Maloney. If you don’t have time to watch it all, skip to 14 minutes in where he explains how the Russian Rouble has suffered five quadrillion times inflation since the 1800s, and is now going through the seventh major loss of value.
Considering the current uncertainty in the markets, it is worth thinking long term right now, and setting some ranges for contribution to your portfolio. And you don’t need to have millions to think like this.
We set a “reasonable range” 30 years ago for gold to be between 5% and 15% of our portfolio. We have never had to use it as contingency, and always been able to do what we need to do by other means (eg overdraft, loans), and that can be a very safe feeling when your electricity cost just doubles overnight.