Demand for gold dropped 7% in Q1 this year to post its weakest quarter since the ‘08 financial crisis, driven, according to MarketWatch, by lower demand for gold bars and gold-backed funds.
What does this mean? And why do people decide to keep their money in gold in the first place?
People just aren’t diving into pools of gold coins like they used to
Namely, because gold is more expensive. Gold was trading around $1.3k an ounce at the end of March (up from $1.1k at the beginning of last year) — but, as far as the economy’s concerned, that’s a good sign.
The Guardian reports that gold demand surged in Q1 last year amidst political uncertainty. But, overall, as the global economy has improved, fewer and fewer buyers have been Scrooge McDuckin’ it.
Generally speaking, why are people bullish on bars?
Gold has a history of holding its value, so risk-averse investors typically gravitate toward gold when the dollar gets weaker, or the market hits the fan (a la 2008).
On the flip side, anti-gold investors like Warren Buffett argue that it doesn’t produce long term returns like a diversified portfolio of stocks and bonds.
Plus, TIME points out that gold comes with the extra challenge of figuring out how buy and store it. Paying for a safe-deposit box comes with extra fees, and keeping it in a home safe can be risky.
Then again, there’s always our grandparents’ favorite — burying it in the backyard.
Get the 5-minute roundup you’ll actually read in your inbox
Business and tech news in 5 minutes or less