Written by Nick Patel, CEO & Founder at Clinq.Gold and Bank of Bullion.

The USD has been a golden standard of stable, long-term investment for many decades, if not centuries by business and the consumer worldwide. Yet, recent events, like the 2023 Fiscal Responsibility Act signed by Joe Biden to increase the debt ceiling and the increasing de-dollarisation of the global economy, seem to be undermining that status. The unprecedented debt of $31.381 trillion that the USA sponsors with “empty” money printing instead of taking proactive fiscal steps is one of the events causing investors to withdraw their money from the widening bubble of the U.S. economy and explore safe alternatives.

So, where should your money go? Which financial instrument can offer the reliability of the USD while mitigating the risks? Statistics show that institutional and retail investors have renewed their interest in  good-old classics like gold. They can invest in gold using many options: buying physical gold, investing in gold-backed ETFs, or embracing an innovative investment variant – tokenised gold. This article will provide an insightful exploration of these investment options.

Gold: A historical perspective

Gold has always been a symbol of wealth and victory since prehistoric times. Rulers stored their assets in gold bars; winners of renounced competitions received gold medals for their achievements; people traded their belongings for gold as a currency.

The popularity and indisputable leadership of gold as a medium of exchange and value are attributed to its rarity. Throughout the entire history of mining, people have managed to get only 187 000 tons of this precious metal from the depths of the earth. This makes gold relatively finite, and its holdings are carefully cherished by owners, from individuals to governments.

Initially, governments used their gold reserves to back their paper money;  however, this practice is no longer in existence today. It is now much more common to denominate the price of gold in US dollars, which explains an inverse relationship between gold and USD price dynamics. A weaker US dollar drives gold prices up, and vice versa. This feature is often regarded as an investor’s hedge against inflation (a mounting indicator in the modern U.S. economy).

Inflation hedge options: Gold vs. treasuries 

Inflation is counterproductive for investors, and the two most common ways to secure one’s belongings amid rising inflation rates are gold and U.S. Treasuries. Treasuries are a “slow but steady” shield from the loss of money’s purchasing power. Treasury bonds secure the investors’ assets and give a compound interest in the form of coupons, allowing investors to get small but guaranteed income over an extended period of time.

A major problem with Treasuries is the meager coupon rate investors can get today. The days when coupons peaked at 20 percent annual payments are long gone, and the present-day annual yield hardly reaches a couple of percent. Therefore, income investors are searching for more profitable options with a decent level of stability and protection.

Could gold be suggested as an alternative? Though gold is naturally less volatile than stocks and shares, it has still witnessed many fluctuations over the past century, tempering investors’ confidence in the eternal growth of gold prices. Still, a quick review of the present-day economy shows that gold has sound investment potential for the coming years. The drivers of gold prices are:

• Jewelry demand
• Gold reserves
• Value of the US dollar
• Increasing market volatility
• Weakening yield of US Treasuries

A combination of these factors promises a stable upward trend for gold prices, which can become a unique investment opportunity for market participants. Here’s how you can embrace the trend and gain a fair ROI from it.

Gold investment strategies for 2023 and beyond

In our view, with gold regaining a top status among attractive investment options, investors may explore a variety of options, such as:

• Physical gold. This is the classic investment method people have been using for centuries. You can buy bullion coins, gold collectibles, gold bars, or jewelry to conserve your money in the physical gold objects.
• Gold ETFs. There are various exchange-traded funds (ETFs) currently traded in the world’s top stock exchanges, allowing investors to buy a share of a gold-backed fund and get profits from its net worth growth. Examples of reliable, well-known ETFs are VanEck Gold Miners ETF (GDX), SPDR Gold Trust (GLD), and the like.
• Tokenized gold. This option is a recent invention, which became possible due to the massive adoption of blockchain technology in the investment and trading sector. This novel approach combines the stability of gold with the mechanics of investment and its associated returns. New projects like Clinq.Gold offer gold-backed funds with a native ERC-20 token – is gaining popularity as a solid investment option driven by Web3 technology and promising high ROI. Clinq.Gold is also launching a revenue share token to distribute the earned revenue among token holders, which adds to the profit margin and increases the project’s appeal to investors.

Final word: Gold is the future of investment

Investors perpetually seek stable, long-term investment opportunities rooted in trust, stability, and longevity of their chosen assets. There are mounting concerns over the declining potential of the US dollar driven by economic challenges both in the USA and worldwide.

Gold is experiencing a resurgence as an investment option characterised by excellent safety and sustainability attributes. Notably, tokenised gold allows investors to harness the best of both worlds by merging the time-tested stability of gold with cutting-edge Web3 technologies. New projects like Clinq.Gold hold a promising potential in the investment market because they combine the safety and stability of gold-backed assets and innovative blockchain opportunities attracting many tech-savvy investors.

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