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Quantfury Daily Gazette

📈Finance

What color is gold?

by
Agustina F contributor

In such an uncertain economic environment, seeking refuge is often the primary task for investors, and historically precious metals have been considered one of the best options. Gold (NYSE: GLD) and Silver (NYSE: SLV) bars can have costs associated with logistics making it an impractical alternative for the vast majority.

The colour of gold is one, and it is that classic yellow, bright gold that we see in necklaces and rings in large jewelry stores, but there is a particularity that occurs only in the financial markets, the ability to make it change colour.

Some say that Oil (NYMEX: QMV22) is black gold due to its value and what it represents for industries; in other sectors, they speak of white gold, referring to lithium which is widely used for energy production and storage; the batteries of the vast majority of electronic devices use this chemical to function, from cell phones and computers to electric cars. Each industry sector assigns it a different type and colour, and it is usually the material or element that adds the most value to its production chain.

Around the world, we have seen how the prices of goods, in general, have suffered increases; it is no secret that the standard of living has become more expensive in all countries, food, services and even more luxury goods such as diamond necklaces or precious metal bars, these are products that are not very abundant, and this gives in addition to its value the prestige that comes with owning them.

We have already given 3 colours to the precious metal (GLD), and in this sense, we can continue, but there is a particular colour that can begin to stand out, the chocolate colour.

Chocolate bars are presented as a novelty to help us in this bitter moment in the economy, sweetening our days and also as a refuge of value. Companies like Hershey (NYSE: HSY) or Mondelez (NASDAQ: MDLZ) had increased their sales in times when the economy had not been going through its best moment, as it happened in 2020 when home baking and pastries were all the rage.

Besides giving us joy when it comes to consuming them, will chocolate bars have the capacity to protect us from inflation? That is the big question to be answered and, clearly, there is no exact answer to this, but just like chocolate snacks, all other goods are affected by this generalized rise in prices. Part of the answer to this question may lie in cocoa, which is the raw material used to make these sweets.

The current conflict in Europe is causing raw material prices to take a hit, and again scarcity is doing its job, but the most important thing to keep in mind is how each industry and/or company reacts in situations of adversity. An often used phrase is, “all that glitters is not gold,” and at times like these, we see how accurate it is.

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