Gold has had a pretty good run over the last decade.... investors have more than doubled their money over that time period.
For a stable asset, which we usually treat as a hedge, that is a good basis of a return.
There are several factors we can point to that might explain these increases:
- The Covid pandemic
- High inflation, although vesting there seems to have been a little belated
- The fact that LARGE investors tend to buy it so there is HUGE demand.
- Tradition, for whatever reason, we trust it.
- Oh, and of course because the price has been going up!
What I don't get is the last year's robust performance...
Gold has returned around 30% YTD, but the odd thing is that the correlations that used to drive the gold price - US interest rate movements and the strength of the dollar appear to have broken down.
Some commentators think the new factor is China - buying up gold to defend itself against a 'weaponisation of the dollar'.
However there are probably even more mundane factors at play..... inflation may have fallen this year but there's a lurking feeling that we are entering into an era of inflation volatility very different from the former deflationary bias.
However check out that latest dip.... Post Trump, maybe now the markets are expecting better performance so it's time to offload some gold.
Is now a good time to buy gold final thoughts...?!?
I'm thinking just buy the dips, shame i missed that recent 10% pull back!