Based on the past experiences of many global crises, the safe haven feature of gold continues to work and it works in part because people believe in it.
Gold has been used since ancient times as a store of value and wealth. It achieves this status because of many factors, its aesthetic appeal, ease of use and low melting point in making easy to produce jewellery or coins than most metals. It’s also virtually indestructible with most gold still here from the moment it was removed from the ground. And we can’t forget, it’s rarity.
Of all the gold mined over history, there has never been enough found to devalue it.
Because of these features and history, gold became the basis for money and played a critical monetary role during the gold standard, which required nations to hold gold reserves as a backing of their currency.
Central banks still hold huge gold reserves. Of 197,576 tonnes of gold mined throughout history, the World Gold Council says 17.2% is held (as bullion or coins) by governments and central banks, 21.6% by private investors, about 47% as jewellery, and 14.2% has gone to other uses (such as in electronics).