Investing while waiting for the price of gold and silver to rise: how can savings be invested in precious metals?
Gold, the precious metal par excellence is often considered a safe haven by investors in times of financial crisis such as the present. Currently, the gold price chart says that the worst times are over and the prices have been consolidating for some time ready to restart upwards.
In the weekly chart, it is clear that the rise of the last few weeks has come to an end and that a healthy reversal will probably come, but in the monthly chart of the price of gold published here, the important resistance is highlighted at 1,375 dollars, broken which the trend will resume towards the maximum. To invest in gold in the long term, you also need to consider interest rates and the trend of the dollar to better understand the situation and prospects of gold.
The US Federal Reserve told the market last week that it did not intend to proceed with further interest rate hikes and promised a healthy pause and a patient approach to future hikes. Gold prices then responded immediately with a jump to $1320 and silver instead dropped by $16 an ounce.
But sentiment towards gold took a decidedly bullish turn in the fourth quarter of last year with the price of gold rising 7.5% and shares of gold mining companies rising 12.6%, in countertrend to the S & P 500 index which lost 13.5%.
Stock markets and stock prices adjusted in the first month of the year, but gold continued its price rally, with the Federal Reserve admitting its latest interest rate hike in December was an error.
Gold is a safe haven asset in troubled global financial markets, and stocks, bonds, and real estate have all come under pressure in recent months. Goldman Sachs also wants to invest in gold. Goldman Sachs traders say long-term gold will be the trading favorite throughout 2019 with a price target of $1,450 an ounce.
Recessionary fears over trade wars and Brexit, consumer price inflation, and central bank buying are all reasons to be positive on bullion and have persuaded other analysts to be more cautious, even as gold prices have touched the bottom at $1,050 just over two years ago.
And the patterns under construction in the charts could confirm this view. The end of interest rate hikes would be a key catalyst for gold not paying interest and being penalized for not doing so when interest rates are on the rise.
In 1989, 2000, and 2007, the Federal Reserve’s first pause in rate hikes signaled an impending recession and rate easing within six months. History may therefore be about to repeat itself.
Gold is a safe haven asset in troubled global financial markets, and stocks, bonds, and real estate have all come under pressure in recent months. Maybe now it’s time for gold.
Indeed, gold has already outperformed other asset classes overall, especially in non-dollar currencies, where it is at an all-time high in over 70 currencies.
If you just think that investment in gold translated into Euros has recorded a performance of 5% to date, it is easy to understand how gold is not just a safe haven asset.