Precious Metals
Why gold has been a store of value for millennia, what drives its price, how silver differs and how to invest through physically backed ETFs.
Gold has served as money and a store of value for thousands of years. Central banks still hold it as a reserve asset. Silver shares some of these properties but is also an industrial metal.
What drives gold
- Real interest rates — gold pays no interest, so it becomes more attractive when inflation-adjusted yields fall.
- The US dollar — a weaker dollar usually supports gold.
- Central-bank buying and crisis demand when trust in currencies, banks or governments falls.
Silver: gold's volatile cousin
Silver tends to follow gold, but with bigger swings, and it depends on industrial demand from electronics and solar panels.
How to invest
Physically backed ETFs such as GLD and SLV — or their UCITS equivalents in Europe — hold the metal in vaults. Mining stocks are a different, much more volatile investment.
Role in a portfolio
Gold has had a low correlation with stocks and has often held up in crises, which makes it a strong diversifier. It moves in long cycles — decade-long bull markets and long flat periods — which suits trend-following well.
Markets in this asset class
Put it into practice: a free account unlocks equity curves and signals for six core markets and the full glossary.
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