Investing Smartly in Gold with NISA, Seizing Opportunities in its Unwavering Price Surge

The skyrocketing of gold that overturns conventional wisdom

Since the beginning of April, the price of gold has reached new highs both at home and abroad, and it shows no sign of abating. Since the beginning of April, the price of gold in Japan and overseas has reached new highs every day, with no sign of slowing down at all. In this article, we will explore the background of this rising market, and experts will explain how you can invest in gold with NISA.

Gold is at the center of the topic in overseas financial markets

While the afterglow of the Nikkei Stock Average reaching its highest level in 34 years is still lingering in Japan, the gold market is the main topic of conversation in overseas financial markets. Since last year, the price of gold has been on an upward curve in an almost unbroken line, and since the beginning of this year, the price has been rising to higher and higher levels one after another. The New York gold futures price, the international benchmark, hit the $2,300 per troy ounce (=31.1035 grams) level on April 3. The retail price in Japan is also moving in the 12,000 yen per gram range.

The main reason why gold is attracting attention today is not only the speed of its rise, but also the fact that it is soaring, defying all conventional wisdom.

A real asset that never loses its value

Traditionally, gold has been called contingency gold and has been preferred by investors as a safe asset. The term contingency gold means that gold is more likely to be purchased as an asset in the event of an emergency such as war, a large-scale disaster, or a global economic crisis. In the case of paper assets such as stocks and bonds, their value may decrease significantly if the company or country that issued them is in crisis. Gold, on the other hand, is a real asset that has value in itself and will not lose its value.

In fact, since 2000, gold has been the only asset that has not lost its value in the aftermath of a crisis, such as the terrorist attacks in the U.S. in 2001, the Lehman Shock in 2008, the pandemic of the new coronavirus in 2008, and Russia’s invasion of Ukraine in 2022. Gold has been bought in every emergency.

Gold in times of crisis is a thing of the past!

However, the current rise in the price of gold is not due to the fact that we are in an emergency. Indeed, the future of Russia’s invasion of Ukraine remains uncertain, and the Israeli-Palestinian conflict is intensifying in the Middle East. At first glance, the world economy and financial markets appear to be in a state of emergency, but a sober look reveals that the world economy and financial markets are not in turmoil. On the contrary, global stock prices and the dollar continue to rise.

It has been a common belief that gold as an asset is, in textbook terms, inversely correlated with the price movements of stocks and the dollar. Inverse correlation means that the price movements are opposite, which is why gold has been bought in times of emergency when stocks and the dollar decline.

However, since around 2022, gold has become forward correlated, meaning that its price movements follow the same trend, and it has continued to rise at a faster pace than stocks and the dollar. This is why gold has attracted so much attention in the financial markets.