This has been a volatile year for investors, but perhaps the biggest shock is that gold has failed to live up to its reputation as the world’s safe-haven asset in a storm.
Gold has acted as a store of value for more than 4,000 years, but in this turbulent year, it has fallen along with everything else.
This will have dismayed investors, who were advised to hold gold in their portfolios as protection against troubled times such as these.
The theory was that when riskier assets like shares fall, investors dive into the precious metal, driving its price up and offsetting losses.
But gold has not done its job this year. Today’s price of $1,706 an ounce is 4.83 per cent lower than it was a year ago.
While that is hardly a meltdown, it is not the type of performance to get the gold bugs buzzing.
“Gold isn’t working,” says David Henry, investment manager at Quilter Cheviot. “This year’s rampant inflation, geopolitical turmoil, recession fears and rock bottom sentiment should have been the ideal environment for gold.”
Yet, it hasn’t worked out that way, which he calls a “head scratcher”.
“A lot of the theoretical bull arguments for gold have materialised this year, yet the asset has gone nowhere,” Mr Henry says.
In the inflation-wracked 1970s, gold was the best-performing asset class, appreciating more than 10 times in dollar terms.
That’s when it won its reputation as an inflation hedge, it has regularly failed to live up to it, Mr Henry says.
When inflation picked up in the late 1980s and late 1990s, the gold price did not rise to match it.
It did put a shift in when markets crashed after the 2008 financial crisis, and again in July 2011, when the European single currency seemed on the brink of collapse.
Gold also peaked at the height of Covid-19 uncertainty, when the price hit $2,084 in August 2020.
But two years later, it is trading about 18 per cent lower, despite this year’s catalogue of economic troubles.
Investors typically buy gold when they are fearful, Mr Henry says.
“Gold price performance during every recession since 1970 has been positive, but it’s hardly a home run every time,” he says.
One reason is that a bar of gold may be “heavy, beautiful and reassuring”, but it generates zero income. That makes it less appealing today, when interest rates are at last rising after a dozen years, driving up the returns on rival safe havens cash and bonds.
“In this environment, the relative attractiveness of a lump of shiny metal, which does not pay you anything, diminishes,” Mr Henry says.
Gold is also less attractive than shares as they continue to pay dividends even when stock markets fall.
The best argument in favour of holding gold within a balanced portfolio is that it “dances to its own beat”, helping risk-conscious investors diversify their wealth, he says.
“Just bear in mind that there are no guarantees that gold will rise when stocks or bonds fall, just as we have seen this year.”
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Watch — Dubai's Gold Souq reopens
Another reason gold isn’t working this year is because the US dollar has usurped its role as the number one safe-haven asset.
Investors have piled into the world’s reserve currency to generate higher returns on offer as interest rates rise and gold will remain on a “shaky footing” while the US dollar is strong, says Vijay Valecha, chief investment officer at Century Financial.
“Until inflation peaks and the Fed eases off, it will continue to be the same old story for gold,” he says.
Investors dumped gold again last week after the US inflation rate in August remained stubbornly high at 8.3 per cent.
Although that was marginally lower than July’s 8.5 per cent, investors took this as a sign that the US Federal Reserve will increase its funds rate by 0.75 per cent this week, says Fawad Razaqzada, market analyst at City Index and Forex.com.
“The dollar rallied sharply as a result, which in turn weighed on gold,” he says.
Gold could have further to fall as a result and could now test last year’s low of $1,676, Mr Razaqzada says.
Shoppers in Dubai Gold Souq — in pictures
But people should not overdo the gloom on gold, says Victoria Scholar, head of investment at Interactive Investor.
“Although gold has struggled this year, the Nasdaq Composite is down by more than 20 per cent, so it has outperformed the equity market,” she says.
Gold could rally at some point, say, if the world slips into recession and inflation and interest rates come down, taking the US dollar with them.
As always, investors must take the longer-term view, Ms Scholar says. “Gold is still up 30 per cent over five years, so it may still make sense as part of a diversified portfolio.”
Gold has done a glittering job for some investors this year. It is priced in US dollars, so long-term investors in other currencies have benefited from the greenback's strength.
The US dollar is up 18.45 per cent against the euro over 12 months, 20.03 per cent against the British pound and an incredible 31.24 per cent against the Japanese yen (also previously considered a safe haven).
Although gold has struggled this year, the Nasdaq Composite is down by more than 20 per cent, so it has outperformed the equity market
Victoria Scholar,
head of investment at Interactive Investor
So for non-dollar investors, gold has shone. It is up 11.14 per cent measured in euros over the past 12 months, and 12.94 per cent in sterling terms.
Over five years, euro investors are up 53.19 per cent and pound investors 50.43 per cent. For them, gold still works.
Mr Henry says gold polarises opinion more than any other asset, with the exception of cryptocurrencies.
There are evangelists on both sides, he says, and urges investors to keep an open mind. “Cast your investment net as wide as possible, which may include gold.”
Most advisers still recommend having gold as part of your portfolio, but typically no more than five or 10 per cent.
The easiest way to gain exposure is through an exchange-traded fund investing in physical gold, such as SPDR Gold Shares and iShares Gold Trust.
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David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
UAE currency: the story behind the money in your pockets
PSG's line up
GK: Alphonse Areola (youth academy)
Defence - RB: Dani Alves (free transfer); CB: Marquinhos (€31.4 million); CB: Thiago Silva (€42m); LB: Layvin Kurzawa (€23m)
Midfield - Angel di Maria (€47m); Adrien Rabiot (youth academy); Marco Verratti (€12m)
Forwards - Neymar (€222m); Edinson Cavani (€63m); Kylian Mbappe (initial: loan; to buy: €180m)
Total cost: €440.4m (€620.4m if Mbappe makes permanent move)
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
More from Rashmee Roshan Lall
UAE currency: the story behind the money in your pockets
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
Salah in numbers
€39 million: Liverpool agreed a fee, including add-ons, in the region of €39m (nearly Dh176m) to sign Salah from Roma last year. The exchange rate at the time meant that cost the Reds £34.3m - a bargain given his performances since.
13: The 25-year-old player was not a complete stranger to the Premier League when he arrived at Liverpool this summer. However, during his previous stint at Chelsea, he made just 13 Premier League appearances, seven of which were off the bench, and scored only twice.
57: It was in the 57th minute of his Liverpool bow when Salah opened his account for the Reds in the 3-3 draw with Watford back in August. The Egyptian prodded the ball over the line from close range after latching onto Roberto Firmino's attempted lob.
7: Salah's best scoring streak of the season occurred between an FA Cup tie against West Brom on January 27 and a Premier League win over Newcastle on March 3. He scored for seven games running in all competitions and struck twice against Tottenham.
3: This season Salah became the first player in Premier League history to win the player of the month award three times during a term. He was voted as the division's best player in November, February and March.
40: Salah joined Roger Hunt and Ian Rush as the only players in Liverpool's history to have scored 40 times in a single season when he headed home against Bournemouth at Anfield earlier this month.
30: The goal against Bournemouth ensured the Egyptian achieved another milestone in becoming the first African player to score 30 times across one Premier League campaign.
8: As well as his fine form in England, Salah has also scored eight times in the tournament phase of this season's Champions League. Only Real Madrid's Cristiano Ronaldo, with 15 to his credit, has found the net more often in the group stages and knockout rounds of Europe's premier club competition.
More from Neighbourhood Watch:
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
The specs
AT4 Ultimate, as tested
Engine: 6.2-litre V8
Power: 420hp
Torque: 623Nm
Transmission: 10-speed automatic
Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)
On sale: Now
KILLING OF QASSEM SULEIMANI
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Dhadak 2
Director: Shazia Iqbal
Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Tuesday's fixtures
Kyrgyzstan v Qatar, 5.45pm
23-man shortlist for next six Hall of Fame inductees
Tony Adams, David Beckham, Dennis Bergkamp, Sol Campbell, Eric Cantona, Andrew Cole, Ashley Cole, Didier Drogba, Les Ferdinand, Rio Ferdinand, Robbie Fowler, Steven Gerrard, Roy Keane, Frank Lampard, Matt Le Tissier, Michael Owen, Peter Schmeichel, Paul Scholes, John Terry, Robin van Persie, Nemanja Vidic, Patrick Viera, Ian Wright.
Naga
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match info
Southampton 2 (Ings 32' & pen 89') Tottenham Hotspur 5 (Son 45', 47', 64', & 73', Kane 82')
Man of the match Son Heung-min (Tottenham)
