Although South African investors have historically lagged behind their global peers when it comes to adopting alternative investments in the wake of global economic uncertainty, they are quickly rethinking traditional strategies.
“With the local currency under pressure, investing in precious metals like gold, silver, and platinum can hedge against the rand’s depreciation and preserve wealth,” according to financial analyst, Dawie Roodt.
ISA Gold, a leading regulated gold trading platform, says it supports the views of both global and local economists who believe that geopolitical shocks and continued aggressive trade policies from the US against the BRICS trade block will continue. These could trigger a retaliatory global trade war and renewed safe-haven demand from investors who will likely move most of their money away from perceived riskier emerging markets to safer developed markets.
This, together with fluctuating and unpredictable US tariffs on imports, the pending review of the African Growth and Opportunity Act (AGOA), and the upcoming review of South Africa’s credit rating by S&P Global Ratings’ scheduled for November, will continue to see global investment uncertainties escalate.
These will be exacerbated by macro-economic uncertainties on home soil in the wake of the downward revision in economic growth for 2025, the still evolving impact of US tariffs, the absence of much needed pro-growth structural reforms, and continued delays in infrastructure spending and service delivery.
Anticipated pressure on global and local supply chains is also likely to negatively influence a commodity driven currency such as the rand.
ISA Goldsays it is not surprised that this will play out in ever greater rand volatility with economists expecting South Africa to face its most unstable quarter since early 2020 – accompanied by further rand depreciation due to sticky inflation, weak exports, and continued capital outflows.
Gold, traditionally seen as a hedge against global crises, is now being reassessed by South Africans not only for its inflation resistance, but also for its ability to offset currency volatility.
As the value of the rand has crept steadily downwards, the price of gold has reached new heights. In real rand terms, the gold price is now three times higher than it was in 1980.
“Clients who secured Krugerrands or gold bars through our platform last July are seeing portfolio gains that outpaced inflation and equities, proof that physical gold remains an essential part of any diversified investment strategy,” says Aziz Moti, COO at ISA Gold.
He notes that, in a South African portfolio, gold acts as both a hedge and an anchor. Gold’s global pricing has the double advantage of enabling investors to benefit from an increasing gold price and a weakening local currency. It provides local investors with a built-in hedge against rand volatility with long-term Krugerrand holders, for example, typically benefitting during periods of economic or political instability.
“When the rand weakens, gold priced in dollars becomes more valuable locally,” says Moti. “This is where Krugerrands shine – not just as a store of value, but as a shield for South Africans navigating an unpredictable currency landscape.”