Price of Gold - Gold as a ”safe haven“?

Gold: Safe Haven

Again and again investors head for the „safe haven“ of gold. That‘s what happened, for example, in the 1970s when the first oil crisis set in (1973) and gold was able to fulfil its role as a „safe haven“ for investments. From 1973 to 1974 the price of a troy ounce increased from 65 to almost 200 US dollars, while during the same period global equity markets crashed by 35%. 

In the following years, the price of gold rose to an interim peak of just under 850 US dollars. It was only as a result of the crisis on financial markets that this level had to be revised to a price of over 1,000 US dollars and during the EU debt crisis to nearly 2,000 US dollars. Once again, gold seemingly proved to be a „safe haven“. Whereas global equity markets crashed by 56% between the beginning of the financial crisis in June 2007 and March 2009, the gold price increased in the same period from around 670 US dollars to almost 1,000 US dollars.

But is it really just the momentary psychological impact of investors that has lifted the precious metal to its new record level. What is it about gold that still holds investors‘ interests?

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