David Rosenberg bullish on Gold $3000
Hello US, there is a possibility of gold experiencing its initial downward trend in multiple sessions.
David Rosenberg, the founder and president of Rosenberg Research, foresees gold’s trajectory reaching $3,000 or surpassing it, indicating that this surge is not solely influenced by the actions of the Federal Reserve.
Why is Gold so much in News ?
Record High Prices: Gold prices have surged to unprecedented levels, surpassing the $2,380 per ounce mark, setting a new record. This remarkable surge has outpaced the performance of the S&P 500 index, distinguishing gold as a standout performer in financial markets.
Geopolitical Risk: Geopolitical uncertainties have provided significant support to the value of gold. Heightened global tensions, conflicts, and economic instability have prompted investors to seek refuge in gold as a safe-haven asset. During periods of escalating geopolitical risks, gold tends to exhibit even greater strength.
Central Bank Demand: Central banks across the globe have been increasing their holdings of gold as part of their reserve assets. Notably, China has displayed a robust appetite for gold, adding more than 200 tons to its reserves in 2023 alone. This strong demand from central banks has contributed to the impressive rally in gold prices.
Interest Rate Expectations: The anticipation of central banks implementing interest rate cuts has provided additional momentum to the rise in gold prices. As interest rates decrease, the opportunity cost associated with holding non-yielding assets like gold diminishes. Consequently, investors seek alternatives to traditional bonds and other low-risk assets, resulting in heightened demand for gold.
China’s Role: Amid a downturn in Chinese equities and instability in the property market, Chinese retail investors have increasingly turned to gold. The Chinese central bank’s active accumulation of gold holdings signals confidence in the metal’s enduring value.
Potential for Further Gains: Analysts at Bank of America have projected a potential 26% increase in gold prices, potentially pushing them to $3,000 per ounce within the next year. This optimistic forecast underscores the remarkable trajectory of gold’s performance.
In summary, the impressive surge in gold prices can be attributed to a combination of geopolitical uncertainties, central bank actions, and expectations of interest rate cuts. As investors closely monitor economic indicators, gold continues to be a compelling asset class deserving of close attention.
Investing in Gold: A Beginner’s Guide
When it comes to investing in gold, there are a few different ways to do it. In this article, we’ll cover the three most common methods: buying Gold Bullion, investing in gold funds, and trading gold futures options.
Buying Gold Bullion (Physical Gold)-
One of the easiest ways to invest in gold is by buying physical gold. This can be done by purchasing gold bullion or gold coins from a reputable dealer or a bank. Gold coins are a popular choice for new buyers, and the most common ones come from South Africa, America, and Canada. When buying physical gold, it’s important to keep it safe by either storing it at home or in a bank. You’ll also want to insure it in case of loss or theft.
Gold jewelry also lets the person who buys gold also enjoy wearing it. Gold is often mixed with other precious stones and metals to make it more valuable and beautiful. The jewelry can be given to the next generation in the family as a special gift, adding more meaning beyond the value of the piece itself. Jewelry is not usually the best choice if you only want to invest in gold, because the price you pay will usually be much more than the price of the gold itself. This is because of the work and skill involved and the extra charge by the seller. Always find out how pure the gold is before buying jewelry so that you don’t pay for more gold than you are actually getting.
Jewelry is usually covered by most insurance policies, which is good if it gets lost or stolen.
Investing in Gold Funds
If you’re looking for a more convenient way to invest in gold, you might consider investing in gold funds. These are funds that trade on the market and track the changes in the price of gold. One example is the SPDR Gold Shares (GLD) fund, which invests in physical gold. Another option is funds that invest in both gold and gold mining companies. While investing in gold funds can be cheaper and easier than owning physical gold, it does come with its own set of risks.
Trading Gold Futures Options
For more experienced investors, trading gold futures options can be a way to make money on short-term changes in the price of gold. Options give the buyer the right, but not the obligation, to buy or sell gold at a specific price for a certain amount of time. Options can be used whether you think the price of gold is going up or going down. If you guess wrong, the most you can lose with buying options is the money you paid to enter the contract.
You can buy and sell options on gold futures in the U.S. through the Chicago market, with the help of a futures broker. Options on gold futures mean you can buy or sell gold at a certain price in the future. Options on SPDR Gold Shares ETF are also available to investors and can be traded in a normal account that has permission for options trading. Some traders also buy and sell gold futures contracts—which trade on CME with the name GC—to try to make money from short-term changes in the price of gold.
How to invest in gold, and is now a good time to buy?
Learn about the 4 different types of gold investments and their pros and cons:
1) Gold Bullion (Physical Gold)
This is the most direct way to own gold, but it also involves high costs of storage, insurance, and transaction fees. Physical gold can be bought as bars, coins, or jewelry.
Gold bullion is physical gold that has been minted or cast into bars, coins, or ingots. Investing in gold bullion has some pros and cons, such as:
Pros
Gold bullion can be a potential inflation hedge, as it tends to retain its value or increase in price when the purchasing power of fiat currencies decreases.
Gold bullion can be a safe haven asset, as it can provide protection and diversification during times of economic or political uncertainty, market volatility, or geopolitical risks.
Gold bullion can be easily bought and sold, as it has high liquidity and demand in the global market. There are many dealers, brokers, and platforms that offer gold bullion products and services.
Cons:
Gold bullion has no yield, as it does not pay any interest or dividends like other investments. The only way to make a profit from gold bullion is to sell it at a higher price than the purchase price.
Gold bullion may incur some storage fees, as it requires a secure and insured place to keep it. Some investors may choose to store their gold bullion at home, in a bank vault, or with a third-party custodian. Each option has its own costs and risks.
Gold bullion can be volatile on a short-term basis, as its price can fluctuate based on supply and demand, market sentiment, speculation, and other factors. Gold bullion investors need to be prepared for price swings and have a long-term perspective.
2) Gold stocks:
These are shares of companies that mine, produce, or explore for gold. Gold stocks can offer higher returns than physical gold, but they also carry higher risks of operational issues, environmental problems, or market fluctuations.
Gold stocks are equity ownership in a publicly traded gold mining company. Investing in gold stocks has some pros and cons, such as:
Pros:
Gold stocks can offer upside potential to the price of gold from production growth, operational efficiency, exploration success, and resource expansion.
Gold stocks can also offer dividends to shareholders, which can provide a steady income stream and reduce the volatility of the stock price.
Gold stocks can be easily bought and sold through online brokers or platforms, with low commissions and fees. They also have high liquidity and transparency in the market.
Cons:
Gold stocks can also underperform the price of gold due to company-specific risks, such as operational issues, environmental liabilities, political instability, labor disputes, or regulatory changes.
Gold stocks can also be affected by market factors that are unrelated to the price of gold, such as investor sentiment, sector rotation, macroeconomic trends, or interest rates.
Gold stocks can also be subject to taxation on capital gains and dividends, which can reduce the net return for investors. The tax treatment may vary depending on the jurisdiction and the type of account.
3) Gold ETFs:
These are funds that track the price of gold or a basket of gold-related assets. Gold ETFs offer low costs, high liquidity, and diversification benefits. However, they also have management fees, tracking errors, and counterparty risks. Gold ETFs are exchange-traded funds that track the price of gold by holding physical gold or gold-related securities. Investing in gold ETFs has some pros and cons, such as:
Pros:
Gold ETFs can offer exposure to the price of gold without the hassle of storing, insuring, or transporting physical gold. They also have lower costs and fees than buying gold bullion or coins.
Gold ETFs can also offer diversification and hedging benefits, as they can provide protection and balance during times of inflation, currency devaluation, market volatility, or geopolitical risks.
Gold ETFs can also offer liquidity and convenience, as they can be easily bought and sold through online brokers or platforms, with high trading volume and transparency in the market. They can also be used as loan collateral.
Cons:
Gold ETFs can also have tracking errors, as they may not perfectly reflect the price of gold due to management fees, expenses, or market inefficiencies. They may also have different tax implications depending on the type of ETF.
Gold ETFs can also have counterparty risks, as they rely on the solvency and performance of the fund provider, custodian, or broker. If any of these parties fail to fulfill their obligations, the investors may lose their money or assets.
Gold ETFs can also have no ownership rights, as they do not grant the investors any direct claim or access to the underlying gold or securities. The investors only own shares of the fund, which may not be redeemable for physical gold.
4) Gold futures and options:
Gold futures and options are both ways to invest in gold without owning the physical asset. Gold futures are standardized, legally binding contracts that trade on exchanges. The buyer agrees to purchase a set amount of gold at a predetermined price and date. Gold options allow traders to take out a position on gold using less up-front capital than they would by trading the physical metal or gold futures contracts.
Some pros of gold futures include added portfolio diversification beyond traditional stocks and bonds, the ability to take advantage of potential profits regardless of market direction, and greater flexibility and liquidity than buying physical gold. However, if gold prices move in an unfavorable direction, options can result in significant losses.
These are contracts that give the right or obligation to buy or sell gold at a specified price and date. Gold futures and options can offer leverage and flexibility, but they also involve high volatility, margin requirements, and expiration dates.
Now coming on to the question – is now a good time to buy?
No single financial expert can tell you the exact perfect time and also everyone’s situation is different, you’ll need to use your judgment.
You also need to be prepared to wait for the price to drop. Unless you can literally predict the future ( no you can’t), you will need to take some risks.
Gold prices have many factors influencing them, and the best way to examine them is in the long term. Don’t look at gold as a get-rich-quick scheme. Gold is an asset that is more considered or acts as insurance because it is stable and protects your purchasing power.
According to some analysts, now may be a good time to buy gold. CNBC’s Jim Cramer has said that gold is poised to rally, making now an optimal time for investors to pounce1. Gold can act as a hedge against inflation – as inflation rises so, typically, does the value of gold. And since inflation remains stubborn, now may be a good time to invest2.
Invest in gold during recession
In the Great Recession of 2007-2009, gold rose from $803/oz. at the beginning of the recession in December 2007 to $934/oz. by the end of it in June 20091.
In the current ongoing recession of 2020-2021, gold reached a new high of $2,058.40/oz. in August 2020, up from $1,472.35/oz. in March 202023.
As of 10 April, 2023, the current price of gold is around $2,345/oz. Check the latest gold price today.
Gold prices tend to rise during recessions as people look for a safe asset, but they may also fluctuate depending on other factors such as interest rates, inflation, supply and demand, and market sentiment.
Recessions are periods of economic contraction that typically last for more than a few months. However, recessions also present some unique investment opportunities for investors who can take advantage of lower valuations, higher yields, and increased demand for certain sectors and assets.
Click here to learn more about Investment Opportunities during recession in the United States.
According to some sources 1 2 , investing in gold during a recession can be a good idea because gold has an intrinsic value, is seen as a safe investment, and can perform well when the dollar and the stock market decline. However, gold is not consistent enough to be a recession-proof asset and its performance may vary depending on the type and duration of the recession.
Get the latest price of Gold here.
The key take away
If you’re considering investing in gold, it’s important to understand the different methods available to you.
Investing in physical gold can be a good way to own the actual metal, but it does require safe storage and insurance.
Investing in gold funds can be a more convenient option, but it comes with its own risks.
Finally, trading gold futures options can be a way to make money on short-term price changes, but it’s a more advanced strategy.
Whatever method you choose, make sure to do your research and work with a reputable dealer or broker.