WHY BUY GOLD IN 2024?

2021 was a busy year for gold. After a substantial climb through the early months of the pandemic in 2020, the gold price has traded above $1,9000 and below $1,700 per ounce during 2021, ending the year mid-way between this range.

The outlook for 2023 will depend on macro-economic impacts including inflation which is currently surging worldwide. Investment bank Goldman Sachs has a $2000 gold forecast, Societe Generale expects $1,950 while Credit Suisse sees gold at $1,850 in 2022

REASONS TO INVEST IN GOLD

MARKET UNCERTAINTY

Around the world, economies are being shaken by a profusion of financial, political and health crises.

Global volatility has not abated, even if the initial shocks of the pandemic have dissipated. Inflation is on the rise and new variants of the virus are causing concern again. With uncertainty still tainting the economic recovery, alongside labour shortages and some Brexit-related trade issues, protecting your assets for the future is prudent.

Physical gold has always been a safe-haven asset that tends to increase in value, as more and more people insure their wealth against financial risk.

COMPARED TO SAVINGS…

Saving accounts are currently offering under 1% interest and some may be in a precarious situation with regard to capital adequacy rules (the amount of capital a bank or financial institution is required to hold).

With inflation already over 4% and rising, and with interest rates paying as little as 1%, your money is starting to lose its purchasing power. Gold has historically hedged against inflation risk and allowed investors to retain buying power, although past performance is not a guarantee of future results.  

COMPARED TO PROPERTY…

With household and national debt at an all-time high and with inflation set to increase above 5% in 2022, there is a fear that the government will increase interest rates, making many people’s mortgage repayments more expensive.

This may result in people having to sell their properties and may cause a considerable fall in their value. The UK government provided a stamp duty holiday during the pandemic to keep the property market buoyant, but these perks are no longer enticing potential purchasers into the market.  

COMPARED TO BONDS…

Government bonds are viewed as risk-free but consequently, return small but steady interest. Corporate or foreign government bonds can deliver higher returns but come with commensurate risk. Since 2000 gold has substantially outperformed government bond yields. Importantly, bonds have a fixed maturity, tying your investment up in the asset until this date, whereas gold can be liquidated anytime.