Gold hits record high
As the price of gold hit record highs, financial advisers have warned investors to think twice before piling into the perceived ‘safe haven’ asset.
According to…
Copy article
4 responses from the Newspage communityCopy all
Copy all
Star Quote
Copy
It's unusual to see the price of gold so high in times of relative equity stability. Gold tends to set new levels when the financial markets are in chaos and investors look for somewhere with intrinsic value to stash their wealth. That said, if markets are expecting rate cuts they may be expecting a global recession to come along with that, so I would expect these heady levels for several months to come. The rush to gold could suggest markets expect some serious economic turbulence in 2024.
Copy
With gold hitting all-time highs, we should ask why. Yes anticipated rate cuts, with a weakening dollar in the US, are contributors. But given that gold is a safe haven and flows to the shiny metal are up, then we should ask why is a haven being sought by markets? It's possibly because they are wary of the performance of economies during 2024. Interestingly, gold has been a good performer year to date with the WisdomTree Physical Gold ETF delivering around 7%. We include gold across investment strategies and prefer physical gold to miners, as it's a better hedge should equity markets correct significantly.
Copy
I have never felt that gold is something hard working families should put their money into. It is not an asset. It does not generate a profit and pay a dividend. It has no real use. It does not pay you anything to own it. In fact, you have to pay someone else to store your gold. It is purely priced on speculation and the greater fool theory. If you are a speculator, then please continue to buy gold, bitcoin, rare stamps and vinyl records. But for most people, stick with global equities. It is the simplest way to create wealth for you and your family over the long term.
Copy
A large driver behind recent gold prices has been the Indian wedding season. With gold jewellery forming such an important part of the majority of weddings in South Asia the demand created often moves the gold market. Whilst this is a seasonal event, October saw India's gold imports surging 60% Year on year, with 123 metric tons of gold being imported, compared with 77 tons from 2022, a 31-month high.
This has been down to a number of reasons, including lower import levels earlier in the year but the net effect has been to create a bull run on gold. When combined with current market uncertainties and concerns about mounting debt levels in reserve currency countries you have a rapidly heating market.
With the demand for wedding gold unlikely to subside until into the new year there may be some upside yet for gold prices.
This has been down to a number of reasons, including lower import levels earlier in the year but the net effect has been to create a bull run on gold. When combined with current market uncertainties and concerns about mounting debt levels in reserve currency countries you have a rapidly heating market.
With the demand for wedding gold unlikely to subside until into the new year there may be some upside yet for gold prices.