Gold is a Safe Investment with a Global Shine

JAKARTA - Gold has long been recognized as a safe long-term investment amidst global economic uncertainty.

In addition, gold as a hedge asset has attracted the attention of investors worldwide, especially in unstable market situations.

With prices that tend to rise over time, gold is not only a store of value but also an alternative investment that promises stability and security for investor portfolios.

The proof is, the price of Antam gold reached its highest record at IDR 1,514,000 per gram on October 21, 2024. If withdrawn in 1 year (year to date/ytd), the price of Antam gold has increased by 34.1 percent.

Based on the investing.com website, when looking at global trade, the spot gold price has strengthened 34.06 percent (ytd) to 2,731.79 US dollars per troy ounce, compared to the beginning of the year at 2,037.19 US dollars per troy ounce.

Safe Investment Amidst Global Turmoil

President Commissioner of HFX International Berjangka Sutopo Widodo said that Gold is often considered a safe investment in the long term because it has high intrinsic value and has been recognized as a valuable asset for centuries.

According to Sutopo, its stability as a store of value can be seen from its tendency to maintain or even increase its value during periods of inflation. This is because when the cost of living increases, it is usually accompanied by an increase in the value of gold, thus protecting investors' purchasing power.

"Gold is not purchased directly with other assets such as stocks and bonds. This means that gold can help reduce the overall risk in an investment portfolio by providing diversification," he explained to VOI, Monday, October 21.

In addition, gold is also a very liquid asset, allowing investors to easily buy or sell it on the global market. Thus, gold provides the flexibility to convert gold into cash when needed.

According to Sutopo, during times of economic or market turmoil, many investors turn to gold as a safe haven. This is because it is stable and not affected by economic fluctuations and government policies.

The value of gold as an investment asset is influenced by several factors, for example inflation. Where, increasing inflation tends to cause the value of gold to increase because it is considered a hedge against currency depreciation, central bank policies, such as interest rates and money printing.

"Low interest rates and loose monetary policy usually increase demand for gold, because gold sells in US dollars, a weaker dollar usually increases the price of gold, and vice versa," he said.

Sutopo added that global political and economic uncertainty can drive demand for gold as a safe haven asset, and factors such as mining production, industrial demand, and demand for jewelry also affect the price of gold.

According to Sutopo, gold has a unique ability to maintain the value of wealth in the face of inflation. When the price of goods and services increases, the value of gold tends to increase, thus maintaining investor purchasing power.

In an inflationary situation, the currency tends to depreciate, while gold as a globally recognized precious metal provides a safe and stable alternative that can help protect investment portfolios from currency depreciation.

During periods of high inflation, investors often look for safe havens to protect the value of their investments. With its history as a safe haven asset, gold has become a top choice for investors seeking protection against economic turmoil caused by inflation.

"Gold tends to increase in value during periods of inflation. This is because demand for gold as a safe haven asset increases when inflation is high, which in turn drives up the price of gold," he added.

Gold as Investment Diversification

According to Sutopo, investment diversification is very important because it can reduce risk. This means that if one type of investment experiences a loss, other investments may still generate profits.

According to him, gold is a suitable choice for diversification and protection against inflation, although there is a risk of short-term price appreciation. Meanwhile, stocks offer high-profit potential but are accompanied by the risk of volatility and company-related risks.

Meanwhile, investment in property tends to be stable in the long term, but has low liquidity and high maintenance costs.

"Each type of investment has its own risks and benefits. The best choice depends on investment objectives, risk tolerance, and investment period," he said.

Prediction of the 'Glitter' of Gold Prices

Sutopo said that economic uncertainty, such as high inflation and loose monetary policy, tends to push gold prices up. Monetary policies from major central banks, such as the Fed which applies low interest rates, can increase demand for gold as a safe haven asset.

In addition, the increasing use of gold in technology and industry, as well as demand from investors seeking protection against inflation, also support the upward trend in gold prices. Considering the predicted upward trend in gold prices, long-term investors may see gold as a safe and profitable asset to have in their portfolio.

According to Sutopo, gold is generally stored as a long-term investment, where the impact will be more pronounced after a period of five years.

Therefore, Sutopo predicts that the price of gold will reach 2,800 US dollars per troy ounce by the end of 2024, and in the next 5 years it is estimated to be at the level of 3,500 to 4,000 US dollars per troy ounce.

Meanwhile, the price of Antam gold at the end of 2024 will be in the range of IDR 1.4 million to IDR 1.6 million. And in the next 5 years, it will be at the level of IDR 2.2 million to IDR 2.5 million.

Similarly, BCA Syariah Director Pranata said that amidst global uncertainty, such as inflation, economic crisis, and current geopolitical conditions, gold remains the people's choice as a liquid and safe investment instrument for the long term. This is reflected in the last five years, the price of gold has shown an average increase of up to 11.19 percent per year.

Pranata said that until September 2024, gold murabahah financing (Emas iB) grew positively by 150.9 percent (yoy) reaching IDR 133.63 billion. Furthermore, the composition of Gold iB financing reached 10.5 percent of total consumer financing at BCA Syariah.

According to Pranata, gold iB financing will continue to grow along with educational activities that continue to be carried out to the community and the development of digital solutions to increase the ease of the financing application process.

Previously, Pranata said that the gold murabahah financing product (Emas iB) is a financing product from BCA Syariah for ownership of precious metals (gold) with sharia principles using the murabahah contract (sale and purchase).

Pranata assessed that today's young generation expects easy, fast, and profitable investments.

"In addition to the very easy financing application process, the advantages of our gold financing include certainty of grammage and installments until the end of the financing with a term that can be adjusted to the customer's ability," he said at the BCA Syariah media gathering event, Monday, October 7.

In addition, Pranata said that Gold iB financing is equipped with easy financing applications with on-site akad services for financing applications outside the branch.

Currently, BCA Syariah is also developing online Gold iB financing applications through the latest mobile banking, namely BSya (bi-sya) by BCA Syariah.

"Through Gold iB financing, we want to increase public access to investment products in Islamic banks while helping to secure their financial future while still adhering to sharia principles," said Pranata.

For information, BCA Syariah noted that until August 2024, BCA Syariah's total assets had reached IDR14.3 trillion, growing 8.7 percent compared to the same period the previous year (yoy).

Meanwhile, BCA Syariah's financing distribution was recorded at IDR 10.0 trillion, growing 30.4 percent (yoy). Third-Party Funds (DPK) reached IDR 10.9 trillion or increased by 9.2 percent (yoy).