Trying for years
Let’s face it. Gold has tried several times during the past years to leave the $2000 behind and climb higher. And that was despite the fact that we had a rising inflation and a lot of crisis around the World. Corona pandemic, Ukraine war, all time high debt levels around the world and lately the Israel/Palestine conflict. Wasn’t Gold not that safe haven asset that investors turn to in times of uncertainty? Wasn’t it meant to be a hedge against inflation? Well, one has to obviously put this into perspective. Of course we saw a rising Gold price since mid of last year but we had a sell off before so on the longer run we are trading sideways since 2020 now.
My thoughts on it
To be honest with you, I don’t believe anymore that Gold is still the one asset in times of trouble. Other assets have arisen the past years. Especially Bitcoin is more and more seen as the better Gold, digital Gold and a lot of money has been invested there instead of Gold. Heard that already years ago that physical gold dealers were worried because of the competition by Bitcoin.
Does that mean I don’t expect Gold to ever climb above the 2000-2100 dollar resistance? No but it won’t see the big returns in the future that we saw in the past decades, like from the 70s to 80s or the rallye until $1900 in 2011/12. We might see $2300-2500 in the coming years but that would be a return of only 10-20% from the current levels. The stock market and even more so the crypto market will most certainly grant much higher returns.
Gold miners
You can tell that obviously a lot of investors see it similarly since the mining companies have underperformed quite a lot, taking into account that we are at Gold price of almost ATH. Newmont or Barrick are still way behind their old highs (see below). Normally they have a positive leverage on the gold price but since years they are rather underperforming. In my view investors simply don’t think they will make significantly higher profits because of a significantly higher Gold price in the coming years. Of course the also have to deal with higher costs because of higher inflation and where quite affected by the pandemic closures etc. but on the other hand that is only one side of the medal. The Gold price is the other and it’s future seems not that spectacular anymore.
What are your thoughts on this topic?