KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Gold has been quietly reaching record prices this year, outperforming all major stock markets when measured in US dollar terms. Despite this strong performance, gold’s current bull run seems to stem from its fundamental properties as a reliable store of value, particularly in uncertain economic times.
Key Insights:
Gold as 'Fallback Money': The latest surge in gold prices is being driven by its role as "fallback money" — a durable and fungible asset that holds value independently of any single country's creditworthiness. While gold has historically been linked to global instability or "apocalyptic thinking," its primary appeal is as a store of value in times of crisis or economic uncertainty. For individuals or countries facing economic instability, such as hyperinflation or geopolitical risks, gold provides a means to preserve wealth when traditional currencies fail.
Central Bank and Institutional Demand: The recent bull market in gold was initiated by central banks, which started accumulating the metal before exchange-traded funds (ETFs) and trend followers joined in. This is significant because it highlights the growing concern among financial institutions about the reliability of the current monetary system. For example, fears of being cut off from the US dollar system — a risk illustrated by recent sanctions on Russia — have led to an increased demand for gold as a hedge against geopolitical uncertainties.
Gold as Portfolio Insurance: Gold’s intrinsic properties make it a "forever" asset — a constant part of a diversified portfolio that should be rebalanced regularly. Unlike its "high-beta" relatives such as silver or gold miners, which are more volatile and dependent on market conditions, gold itself serves as a stable store of value over the long term. Even as the world grows more geopolitically complicated, central banks have consistently held gold as part of their reserves, reflecting its continued relevance in the global monetary system.
Investment Implications:
For investors, gold represents a form of portfolio insurance that can provide stability amidst economic and geopolitical uncertainty. While other investments related to gold, such as silver or gold mining stocks, may offer opportunities during periods of heightened demand, they are more suited to short-term gains rather than long-term holdings. Investors should consider gold as a permanent component of their asset allocation strategy, rebalancing as necessary to maintain the desired exposure in their portfolio.
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