Our Gold Guy
No Result
View All Result
Saturday, February 4, 2023
  • Home
  • Finance
  • Business
  • Economy
  • Politics
  • Contact Us
Our Gold Guy
  • Home
  • Finance
  • Business
  • Economy
  • Politics
  • Contact Us
No Result
View All Result
Our Gold Guy
No Result
View All Result
Home Finance

Where Will Gold Prices Go? It Depends on the Economy

by Fan Yu
August 21, 2022
in Finance
Gold

Gold, traditionally an inflation hedge and a haven investment during times of market duress, has not been an effective investment this year.

Inflation has been elevated. The Consumer Price Index was up 8.5 percent in July versus a year ago, slightly lower than the 9.1 percent year-over-year reading in June. And despite a recent U.S. stock market rally, the S&P 500 Index remains down 10 percent year to date. And gold’s theoretical nemesis, bitcoin—which some experts dub as “digital gold”—is down almost 50 percent on the year.

All of this suggests a perfect backdrop for gold to outperform, right? Wrong.

While gold hasn’t been the worst performing asset class, it has nonetheless languished. The price of gold has fallen by more than 3 percent since Jan. 1. The NYSE Arca Gold Miners Index is also down more than 16 percent on the year.

IRA BERSHATSKY LOVES AMERICA – Most precious metals companies are run by wokesters. Ira’s is not. He is unabashedly AMERICA FIRST and can help you move wealth or retirement to physical precious metals with a gold or silver IRA, or just get metals discreetly shipped to your door. Contact him now.

There are a few reasons for this, despite the seemingly ripe conditions.

First, gold is priced in U.S. dollars. So the stronger the dollar, the fewer dollars it takes to purchase an ounce of gold. That’s a mathematical and mechanical truism.

While U.S. inflation has been running hot, the Federal Reserve has been diligent in raising benchmark interest rates. And more importantly, investors still expect further interest rate hikes in the future. While many economists believe the Fed has been behind the curve in “normalizing” interest rates, on a relative basis it has acted quicker in raising rates than other national central banks.

High relative interest rates versus other nations have attracted foreign investment flows into the United States and strengthened the U.S. dollar. Year to date, the dollar has risen more than 11 percent against the euro and more than 16 percent against the yen.

This dollar strength has effectively capped the performance of gold.

The other deterrent is interest rates. The Fed’s rate hikes have also sunk bond prices. This means the yield on various types of fixed-income instruments, such as government, corporate, municipal, and consumer debt, are rising as their prices go down. Such a dynamic makes bonds an increasingly attractive investment.

A high interest rate is perhaps the biggest factor working against gold. Gold, as a commodity, does not pay a coupon. So higher yields on bonds are an argument against investing in gold.

Since hitting an all time high of around $2,100 per ounce in 2020, gold has been steadily declining.

Our Gold Guy America First

So is gold’s appeal as an inflation hedge and haven asset class over?

It depends on which side of the fence you sit on regarding the outlook of the U.S. economy.

The argument against gold lies in the belief that the central bank can control inflation by increasing interest rates and managing a “soft landing” of the U.S. economy and avoiding a deep recession.

That’s effectively the thesis from Capital Economics, which forecast a year-end price of $1,650 for gold. That’s not a huge decline from today’s price, but the modest decline would be driven by further strengthening of the dollar and the 10-year Treasury bond yield settling in the 3 percent range.

So far, that’s the path the Fed hopes the nation’s economy is on. Minutes from the August meeting showed that policymakers were intent on increasing interest rates and tightening monetary policy to a level that could restrict economic growth. Though that’s always been the plan, there is a fine line between restricting growth and causing a deep contraction.

But if you believe the U.S. economy is doomed and the central bank will be pressured to lower rates to stimulate growth, then gold prices will likely outperform.

Such an argument was made by economist Nouriel Roubini—aptly nicknamed “Dr. Doom”—in a recent interview with Bloomberg TV.

Roubini sees two options for the U.S. economy. One is the Fed aggressively increasing interest rates to the 4–5.0 percent range, at the detriment of the economy. The other option is sustained high inflation of above 8 percent with relatively lower interest rates because the Fed would have no choice but to stop raising rates or even lower rates owing to the poor economy.

Investment bank Goldman Sachs & Co.’s chief economist Jan Hatzius also believes the United States find it hard to avoid a deep recession.

Relatively high inflation and relatively moderate interest rates. That is an environment ripe for gold prices to outperform.

Article cross-posted from our premium news partners at The Epoch Times.

The Biden Regime and Globalists Don’t Want You Owning Precious Metals

Look around. Things aren’t the way they should be. Between Pandemic Panic Theater, Ukraine, food shortages, and a push for Central Bank Digital Currencies, everything you’ve spent your life building and protecting is in jeopardy.

Precious metals are historically the most reliable and safest hedge against economic turmoil. With the Biden regime and globalists enhancing the chaos, it’s important for patriotic Americans to take control of their financial future.

Ira Bershatsky offers consultations to those who want to invest in precious metals. During these consultations, he will match your current financial situation with the best physical precious metal purchases whether you want to rollover your IRA or have coins discreetly shipped to your home. You will not talk to a telemarketer or sales rep. You will talk to a true expert in precious metals with decades of experience helping people protect and advance their wealth.

Fill out the form here and we will schedule a precious metals consultation with Our Gold Guy, Ira.

Schedule a Precious Metals Consultation Today:

Tags: EconomyFinancesGoldInvestmentLedeThe Epoch TimesTop Story


Learn more about RevenueStripe...

Bypass Big Tech Censors



Our Gold Guy



MyPatriotSupply


European Central Bank

Is a Bank “Bail-In” Imminent?

February 4, 2023
Joe Manchin’s Wife’s Commission Received $200M from Omnibus Bill

Joe Manchin’s Wife’s Commission Received $200M from Omnibus Bill

February 4, 2023
The Fixed Game of Price Caps on Russian Oil

The Fixed Game of Price Caps on Russian Oil

February 4, 2023

Recent News

European Central Bank

Is a Bank “Bail-In” Imminent?

February 4, 2023

Search

No Result
View All Result

Site Navigation

  • Home
  • Contact Us
  • Finance
  • Business
  • Economy
  • Politics

About Our Gold Guy

This site is dedicated to helping Americans learn more about the economy, business, and politics. Our nation is in turmoil on all three fronts. We want to make a difference.

© 2021 NOQ Report

No Result
View All Result
  • Contact Us
  • Finance
  • Business
  • Economy
  • Politics
  • Contact Us

© 2021 NOQ Report

Session expired

Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.

>