Gold: The less that are interested, the better

by Jan 13, 2021Market Reviews

Gold: The less that are interested, the better

Like Tesla, Gold has had a legendary 2020. Gold reached all-time highs just shy of that $2,080/Oz mark before retracing in the latter part of 2020.

Gold ETF’s Ballooned to over $550 Billion inflows, to the point where Gold ETF managers had nowhere to store the Gold they purchased for the ETF’s.

Gold peaking around $2,080 before retracing off its all time high

With Gold at around the $1,850/Oz mark, investors and traders wonder what has happened to Gold and its future holds.

Gold did what Gold does best

I believe it is quite simple – Gold did its job, and it did it well. Last year, Gold bolstered one of its essential characteristics: to be a Safe Haven. The first half of the year saw unpreceded and widespread lockdowns amidst a recessionary period across the world. Stock markets plunge, and bond yields tightened.

Gold rose as the first half of 2020 got worse

And, of course, Gold prices rose. As the Coronavirus worsened throughout the year, with second waves and uncertainty when the vaccine was going to come, the price rose even more. However, as things started to ease up around the world, with a vaccine in sight, Gold pulled back. Uncertainty turned into some certainty. Risk-on was back, and Gold was left to be.

Gold is best when it is believed to be a safe haven, not a speculatory asset

Hindsight is 20/20, and it’s easy to say now that Gold’s price fluctuations were due to this. I would be first to say my prediction of Gold was incorrect. However, this gives us information about how Gold may react in the future.

While Gold was at its all-time highs, the world “valuation” started creeping into analysts’ mouths when talking about Gold and its price; a word which I believe should not be associated with any safe-haven whatsoever, and a word which I think is a good indicator as to when to sell your safe haven asset. There should be no hesitation when switching from risk on to safe-haven assets due to the possibility that the safe-haven asset is “overvalued.”

Inflationary periods are being discounted

With 2021 traveling full steam ahead, amidst Capitol riots, possible impeachment hearings, and increasing Coronavirus cases in America, Gold has settled around the $1,850/Oz mark. Many analysts predict an inflationary period in the US Economy will bolster Gold’s price, which still may highly be a possibility.

However, Margaret Yang, a strategist in DailyFX, believes that the market discounted inflationary pressures, and “that means the selloff in Gold could be temporary, and the downside may be cushioned by fresh stimulus to be announced by Biden.”

What do you think the future holds for Gold?

Related Posts

Stocks coming into 2021 – Boom or Bust?

Stocks coming into 2021 – Boom or Bust?

Stocks coming into 2021 – Boom or Bust?

Here are two fun facts from equities in 2020.

· The NASDAQ returned 46% from the start of 2020. If you purchased at the peak of the recessionary period in mid-March, you would’ve made a return on investment of 85%.
· Meanwhile, the S&P500 only returned 17% from the start of 2020.
· The average price/earnings ratio for stocks in the NASDAQ was pushing 23
· The best performing stock that is in the S&P 500 and NASDAQ was Tesla, providing a 743% Return.

With that in mind, what are we expecting for stocks coming into 2021?

read more

Black Bull Group Limited (trading name: BlackBull Markets) is a New Zealand registered and incorporated company (company number: 5463921).
We are also registered with the Financial Services Provider Register (number: FSP403326).

Black Bull Group UK Limited is registered in United Kingdom, Company Number - 9556804. Payment clearing services provided by: BlackBull Group UK Limited (Company Number - 9556804) Address - 483 Green Lanes, London, Greater London, United Kingdom, N13 485

Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.

All payments related to the Paysafe Group are facilitated by Black Bull Group Limited.

Copyright © 2021 Black Bull Group Limited. All Rights Reserved.

Share This