In difficult or uncertain economic times, many investors turn to gold as a safe haven and low-risk asset to protect their wealth. This raises the question; how effective is gold investment at hedging against an economic crisis?

With events such as the ongoing war in Ukraine slowing the global recovery from the pandemic and bringing new uncertainty, find out why gold is a dependable asset that can help you to weather the storm.

What happens to gold prices during a recession?

The uncertain geopolitical situation coupled with rising inflation and interest rates saw most stocks take a hit in Q1 2022, but the gold market bucked the trend. The spot gold price rose 13.5% from the start of the year to reach more than $2,000 per ounce by March, close to its all-time high.

This isn't just a recent phenomenon. Gold has historically tended to thrive against a difficult economic backdrop, including most major stock market crashes and periods of inflation. The inverse relationship is so strong that analysts revised their modest forecasts for the gold market for 2022 in light of the Ukraine conflict, expecting at least a short-term elevation.

Why does the gold price rise when markets fall?

The negative correlation between gold and the stock market can be explained as gold investment benefiting from the climate of fear and uncertainty that drives other stocks down, but the full picture is more complex and nuanced.

Gold is a resilient asset that is relatively isolated from global macroeconomic influences and the economy at large. This protects it from shocks and makes it the ideal asset to back for wealth protection. While gold investment will yield the greatest returns in a crisis, the precious metal is never out of style.

Investing in gold in 2022

Bloomberg is forecasting another breakout year for gold in 2022 if inflation and uncertainty persist. While gold may not offer the most dramatic returns, it has proven time and again to be a safe option for protecting and growing wealth when other markets are volatile.

Besides investing in physical gold, investing in ASX-listed gold producers can offer more lucrative gains over the long term as Australia's resilient mining sector goes from strength to strength.

White Rock Minerals (ASX:WRM)

White Rock Minerals (ASX:WRM) is a near-stage gold producer and polymetallic and precious metals explorer.

The Company's objectives are to create and enhance shareholder value through the development of three key assets: the Woods Point Gold Project in Victoria, Australia, the Mt Carrington gold and silver project in Northern New South Wales, and the Red Mountain polymetallic project in Alaska, USA.

This portfolio of assets provides investors with diversification through high-quality projects at differing developmental stages, exposed to different commodities, in two first world jurisdictions, that should provide year-round news flow and the potential for steady value creation.

To keep up to date with White Rock Minerals news and progress, and for more information about gold investment as a whole, subscribe to the Company's Chairman's List.