In which currency should i buy gold 2026?

This text explores the relationship between gold and currencies, how exchange rates impact your investment, and our perspective on currency hedging.

7 Facts about currencies and gold

1. A fiat currency, such as the Swedish krona (SEK) or the euro (EUR), serves as a medium of exchange – a means by which we can trade the time and production we contribute for the goods and services we wish to consume.
2. Fiat currencies have no value in themselves and must be stable to function optimally.
3. Gold is an element/raw material and thus has an "intrinsic value".
4. Like all elements, gold is unique and has unique properties.
5. Gold is gold, and is a constant while the price of fiat currencies changes depending on the market conditions.
6. Gold does not pay interest because it has no counterparty risk.
7. The value of fiat currencies always returns to their "intrinsic value", which is zero. For example. the USD has declined more than 97% in constant gold terms since 1971-08-15.

Two people buy gold with different starting currencies

Date of purchase: 2022-01-01

Rate: 9.1 SEK/USD Gold price (USD): $1,801/oz Gold price (SEK): SEK 16,389/oz

Person 1: Buys gold for SEK Starting capital: SEK 100,000 Buys Gold: 6.10161022 oz (= 100,000/16,389)

Person 2: Buys gold for USD Start: $10,989 (=100,000/9.1)
Gold price: 1,801 USD/oz Buys Gold: 6.10161022 oz *(=10,989/1,801)

Date of sale: 2022-10-25

Rate: 11.15 SEK/USD Gold price (USD): $1,648/oz Gold price (SEK): SEK 18,375/oz

Person 1: Sells gold for SEK Capital: SEK 112,118 (=6,1016 x 18,375)

Person 2: Sells and exchanges to SEK Capital: $10,055 (=6,1016 x 1648)
Exchanges to SEK: 112,118 SEK (=10,055 x 11,15)

Why the currency you buy gold in doesn’t matter

Buying gold, or a share, in SEK or USD (or other currency) has no effect on the final result of the change in value. Both person 1 and person 2 in the example above have 112,118 SEK after finishing the trade.

Thus, both people have the same purchasing power at the starting point as the ending point, regardless of the currency they traded in. So you never have to think about whether you should buy gold or a share on the Swedish, American, or Canadian stock exchange (or any other stock exchange). Thus, it does not matter if you e.g. buys Lundin Mining on the Stockholm Stock Exchange in SEK or on the Canadian Stock Exchange in CAD.

Looking at the percentage development of the invested amount is wrong if you look at the change in the gold price in USD (-8.5%) and SEK (+12.1%). In order for it to be correct, the different exchange rates at both the time of purchase and sale must be included in the calculation of the development of the investment.

Alternatively, investing in physical gold can provide a stable store of value that is less affected by currency fluctuations, offering a different approach to gold investment.

Weaknesses of depositary platforms'

Today, the depository platforms' systems cannot handle the percentage calculation correctly (in the case of securities that are traded, are listed, in a currency other than SEK) as they use the current/day's exchange rate for both daily value and purchase value. Thus, person 2 above would see a percentage development on his investment of -8.5% when in fact it is +12.1%.

This of course creates confusion for ordinary investors when they follow the development of their investments. The reported value in kroner in relation to the invested amount in SEK gives the right percentage for the development of the investment. It becomes even more difficult for the platforms to calculate/show correct percentage development if you as an investor have made several different investments at different rates in an instrument.

Why we do not hedge currencies

We do not hedge currencies because hedging against major currencies is not favourable in the long term. In the short term, you can make money if you manage to get it right both when hedging and when closing the hedge, but it also involves risk and speculation that we do not see as part of our management.

Hedging would create a black-box for our investors who would not know what currency positions we have at different times. In funds with exposure to other currencies and with low risk that then have an expected low / stable return, the currency issue becomes relatively more decisive (the currency's degree of influence on the total return).

All our funds have currency accounts in all the currencies we trade in or have share classes in. We have small or large balances in these currencies but are normally 99%+ invested, so these balances are marginal. We never exchange before trading, but exchange the currencies with us after trading, thus avoiding negative balances in any currency account.

By avoiding currency hedging, we maintain a transparent and long-term investment strategy that focuses on our core business - investing in gold and other precious metals.