Greatest value to investors Gold’s long-term stability

reported.

WGC Outlook for 2023

Based on gold’s 2022 performance, the WGC said it has not altered its view of a good year for gold in 2023, with more upside potential than downside risk given a growing risk of recession in the US and Europe.

“A lacklustre 2022 for ETF and OTC demand is likely to set the stage for a year of growth in investment,” said the WGC, noting that “gold’s stable performance in 2022, despite strong headwinds from rising rates and a strong dollar for most of the year, has reignited investor interest.”

“Jewellery demand is also likely to capitalize on a resilient 2022, driven primarily by the reopening of China,” the WGC added. Gold investment itself has also become more diverse. The advent of gold ETFs in 2003 opened up a significant source of gold demand and, over the course of almost 20 years, they have amassed 3,473 tonnes of gold holdings worth US$203bn. What was initially a largely regional phenomenon now boasts more than 100 physically-backed gold ETFs available across the globe, giving investors liquid alternatives to add gold to their portfolios.

Bar and coin investment has also remained popular worldwide. But most notably Europe is now one of the biggest regional gold investment markets in the world, accounting for around 20% of annual global bar and coin demand in 2022.

India and China have risen as super consumers of gold compared to when the World Gold Council first published its Gold Demand Trend newsletter in the 1990s. Back then, India and China accounted for less than 20% of total annual consumer demand combined. Today these two countries make up nearly 50%

China’s role in today’s global gold market is almost unrecognizable from that of thirty years ago. Gold has long played a culturally important role in China. But for half of the last century individuals were banned from buying and trading gold. Gradual easing of restrictions during the 1990s culminated.

In the Shanghai Gold Exchange being set up in 2002, with full market liberalisation complete in 2004. The nation’s gold consumers responded swiftly: demand for gold jewellery, bars, and coins ballooned.

China’s annual gold consumption has risen five-fold – from a little over 375t in the early 1990s to a record high of 1,347t in 2013. Since then, China has been the world’s largest gold consuming country.

Central Bank buying however is unlikely to match 2022 levels, according to the Council, as demand remains difficult to forecast partly because it can be policy driven and does not always respond to the most common economic drivers.

“Lower total reserves may constrain the capacity to add to existing allocations. But lagged reporting by some central banks means that we need to apply a high degree of uncertainty to our expectations, predominantly to the upside,” the WGC said.

Not So Fast!

Gold may be lower in 2023 predicts gold expert Harry Dent

Gold to be hardest hit commodity in ‘massive crash’, bear market in early stages predicted pessimistic, Harry Dent (an American financial newsletter writer. Harry’s 2009 book, The Great Depression Ahead, appeared on the New York Times Bestseller List) in an interview with Kitco news in the end of January, 2023. Dent predicts a dire 2023 for Gold, which has been trading up for 2023 and was at $1,930 per ounce at the time of the Kitco interview.

Higher gold prices and demands will reverse in 2023 and have a dramatic decline as “the biggest crash in our lifetime” enters its second wave, according to Dent. And the pessimistic Dent maintains 2024 will be even worse. Dent is calling for gold to reach as low as $900 per ounce by mid-2024.

“Gold is not a safe haven,” he maintained. “I’m predicting that gold goes down between $900 to $1,000. By way of explaining his predictions, Dent said that an “everything bubble” has been manufactured by the U.S. Federal Reserve’s loose monetary policy, which had caused booms in most asset classes, especially stocks. “The next wave” downwards will occur once this critical level is reached, he added. From its all-time high, Dent expects the NASDAQ to fall 92 percent and the S&P 500 to fall 86 percent. Gold will crash, along with other assets, to $900 per ounce, said Dent, but will ultimately reach $4,000 after markets recover and whenever the next economic boom takes place.

Gold will be golden in 2023 but be smart about it

Prudent investment dealers advise investors to proceed cautiously. The demand and price for gold can be influenced by many factors. As Tom Maxwell, of CBS News notes, “ no one can predict what the future holds for the price of gold, it’s important to understand where gold might be headed in 2023 before you invest in this precious metal.”

As with any investment, always research or consult your financial advisor before investing in an asset. Whether gold’s value soars in 2023, as some analysts predict, or crash as Harry Dent predicts, remains to be seen.