The problem is that, during a stock market crash, virtually all assets fall in value. However, gold and other precious metals almost always rise, making them a better option than many other investments. The reason gold tends to be resilient during stock market crashes is that both are negatively correlated. In other words, when one goes up, the other tends to go down.
The most important is that you cannot claim the underlying gold held by the fund, which, according to some investors, is contrary to the purpose of owning gold. A recent study noted that there had been significant outflows from gold to cryptocurrencies and suggested that cryptocurrencies are a better store of value than gold. The only major sale of gold (-46 percent in the early 1980s) occurred just after the biggest bull market for gold in history. India's gold consumption in the second half of each year is usually higher than in the first half of the year, and coincides with October's Diwali (early first quarter), according to data from the World Gold Council.
Now that you understand that gold is a store of value, you may be wondering how the price of gold reacts to various economic conditions. However, history has shown that, in most cases, there is a positive correlation between gold and interest rates, that is, when interest rates rise, so does the price of gold. Despite the fact that no country currently follows the gold standard, many countries still maintain large gold reserves in the event of an economic collapse. These are publicly traded gold miners and suppliers, and ETFs have a positive correlation with the price of gold.
Because gold maintains its value, you can compensate for the loss of purchasing power of your dollars by investing in gold. If you want to specifically participate in the gold sector without having to own and hold physical gold, you can purchase these exchange-traded funds that focus on gold. Since 1971, when the gold standard was abandoned, gold prices have seen largely positive changes during recessions. Gold also has a low and negative correlation with the stock market, suggesting that changes in the price of gold are largely independent of stock developments.