- Gold Hub: How Relevant is Gold in 2022?
- Degussa: Good Tidings for Gold and Silver
- Eurasia Review: Central Bank Gold Stockpiles Reach Record High
Image: Eurasia Review
Gold Hub: How Relevant is Gold in 2022?
Gold remains a valuable strategic asset thanks to its diverse source of demand: as an investment, reserve asset, jewelry and technology component. It’s scarce, preserves its value over time, and is highly liquid, so it doesn’t directly conform to the valuation methodologies used for equities or bonds.
According to the World Gold Council its price performance is driven by four factors: economic expansion, risk and uncertainty, opportunity cost and momentum, while it can improve a portfolio by increasing its returns, diversification, liquidity, and overall performance.
According to Gold Hub, inflation, concerns with supply chain and the ongoing uncertainty caused by COVID remain the main concerns for gold investors in 2022. Many Central Banks claim that the recent uptick in inflation was only temporary and caused by COVID, others acknowledge that it is here to stay. The supply chain difficulties caused by the pandemic have also not fully dispersed, which could halt economic growth and add more inflationary pressure.
The market expects rate increases and a strong US Dollar, but the real and nominal rates should still remain at historically low levels.
20.1.2022, Staff Writer
Degussa: Good Tidings for Gold and Silver
The world economy’s recovery from the political lockdown will continue at a slow pace in 2022. The Degussa Market Report estimates that the world GPD could grow by 4.2% this year (down from the 5.8% of 2021). Still, there are a number of risk factors, such as the ongoing pandemic, the global energy security, and geopolitical tensions between US and China, and Russia and the west.
The global economy’s recovery has been strong because of the expansionary monetary policy of the Central Banks, with interest rates being pushed near and below zero, and the grand increase of credit and money supply. This ‘monetary overhang’ has driven up goods prices.
The Federal Reserve will change its course soon, with its plans to end bond purchases and raise interest rates. Most likely the other major banks will follow suit. It remains to be seen how the economies and financial markets react to the tightening monetary policy and how far these measures will go.
These expectations have kept the prices of precious metals in check. However, Degussa’s analysts believe that the banks will prioritize keeping their economies going to suppressing inflation. This means that the gold price will likely return to its upward trend. Especially increased investor demand might push the gold price towards 2.100 $/oz this year.
20.1.2022, Staff Writer
Eurasia Review: Central Bank Gold Stockpiles Reach Record High
The Central Banks have added more than 4,500 tons of gold to their holdings over the last decade, with their global reserves exceeding 36,000 tons for the first time since 1990. This goes against the mainstream rhetoric that the current inflation is only transitory and that there’s little reason to hold any gold at all.
If you look at what the Federal Reserve and other Central Banks are doing instead of what they’re saying, you see strong support for investing in gold. Their public statements differ from actual policymaking – and their increased gold stockpiling.
While inflationary risks are certainly on the conservative investor’s mind, this gold buying spree is also highlighting a larger, long-term shift: the dollar’s place as the world’s reserve currency is deteriorating. This trend has been closely followed by precious metals investors as well as geopolitical powers such as Russia and China. For example, for the first time in the nation’s history, Russia’s gold holdings have surpassed its dollar reserves.
It’s essential for an investor to follow this shift. When fiat currency’s debasement continues and accelerates in the coming months and years, physical gold will remain the only reliable safe haven.
20.1.2022, Claudio Grass