The price of gold reached a record high of $2000 per ounce in August 2020, but it has declined since then. Analysts point to the crypto boom and rising US Treasury yields as culprits for this price decline (Source: capital.com/Citibank).
The price of gold reached a record high of $2000 per ounce in August 2020, but it has declined since then. Analysts point to the crypto boom and rising US Treasury yields as culprits for this price decline (Source: capital.com/Citibank).
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5/25/2022

Why Gold is Valuable and Should I Invest in Gold in 2021?

The CIO of BlackRock’s Natural Resources division, Evy Hambro, gave an excellent analysis on the value of gold in a recent Money Maze Podcast episode. It was particularly insightful given the pitfalls in the world of finance today.

I would like to highlight 6 key takeaways and topics from this episode, and then expand upon them in more detail:

  1. You can’t print more gold; gold is a defence against the money printing and currency debasement.
  2. Given the current environment today, there is a “perfect storm arriving for gold”.
  3. BlackRock’s Natural Resources’ concept in investing.
  4. How the mining industry is prone to interruptions.
  5. Responsibilities of sustainable investing for BlackRock.
  6. Key advice for students.

Firstly, the episode reveals the advantage of gold and how it retains its value so well. It holds long-term purchasing power, which means significant protection against paper currency regimes (which have dissolving purchasing power). Show host Simon Brewer highlights that fiat currency has a “100% history of failing, unlike gold’s 100% history of permanence”.

The second key talking point that stuck out for me was around the recovery stage of gold. The uncertainty in today’s environment highlights the attractiveness of acquiring a real valuable asset like gold. Notably, gold isn’t as affected by the current COVID-19 linked disruption relative to contemporary currencies (to the contrary, it benefitted from the pandemic). Additionally, gold helps to control inflation and encourages fiscal discipline. Evy Hambro describes a growing interest in gold as “perfect storm”, whilst in the past owning gold meant diminishing opportunity cost.

Thirdly, I thought it was interesting hearing about the concept of BlackRock in investing, and how Evy’s mission is to capture the best possible exposure to gold via gold equities. Sharing light on how this equity-based growth potential can outweigh its unpredictability, and therefore how dividends can significantly outperform gold bars alone.

“The interest in cash is more expensive than storing gold in a bank’s vault.”

— EVY HAMBRO, CIO OF THE BLACKROCK NATURAL RESOURCES TEAM

Fourthly, Evy discusses the importance of global exposure to BlackRock’s portfolio due to the volatility of the mining industry. Encouraging geographic diversification can mitigate interruptions such as countries having differing fiscal terms and unexpected taxation on resource assets.

Evy then discusses how the role of sustainable investing is a core value in BlackRock; increasingly becoming immensely relevant in most business practices today. He discussed how socially responsible investing is paramount to BlackRock’s operations, including how it manages risks of community unrest and maintaining tourist access.

Lastly, Evy reveals some golden advice to aspiring young investors, such as the importance of paying attention to the growing role of data and learning how to code.

By Madeleine Campion, a Money Maze Podcast Brand Ambassador. Madeleine went to the Dragon School in Oxford and then attended boarding school in Uppingham. She is currently studying Business and Marketing at Edinburgh University. She's also been a member of the 100 Women in Finance network for 2 years and is particularly drawn to how the show is innovating the world of podcasting.

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