Now that we’re in 2023, are you ready to take your investment portfolio to the next level? Then it’s time to consider investing in gold!

This shiny metal is more than just a pretty accessory – it’s a powerful investment tool that can help you diversify your portfolio and potentially protect against market volatility, which we probably will have a lot of this year!

Between the end of January 2022 and the start of March 2022, the price has risen a whopping 16% to $2,070/oz, as Russia’s invasion of Ukraine sent investors running for the hills (or rather, running for their gold).

Of course, inflation eventually became the key market theme for the past year, significantly affecting most financial markets, precious metals included and as major central bankers tried bringing it inside their respective tolerance zones, it introduced a lot of volatility to the markets, as gold came crashing down by 22%, before finding its footing at $1,615/oz.

But as 2022 came to a close, it managed to rise nearly 14% since early November, as inflationary pressure appears to be easing, and China continues to relax its severe zero-covid rules.

This potentially sets the stage for gold, with strong momentum for 2023, to finally reach new record highs. 

But can Gold pull it off? Let’s find out!

Related Article To Read: Gold to Explode in 2023, but Pay Attention to the Miners

But first, why gold

Well, for starters, it’s shiny and who doesn’t love a little bit of sparkle in their portfolios?

Seriously, this metal can be a great addition to a well-diversified investment portfolio.

It has a low correlation with other asset classes, which means it can help balance out the ups and downs of the market. 

Plus, it’s been known to hold its value over time, making it a potentially attractive option for preserving wealth and protecting against inflation, and in times of economic or political turmoil, gold is often seen as a “safe haven” asset. 

If Central Banks keep them, then it’s a good enough reason for me to keep them as well!

 

Outlook for 2023

If the global economy continues to remain in a rut, and central banks start getting a little bit more relaxed with their monetary policies, especially in the US, then gold could potentially continue to rise in 2023. 

With China continuing to open up, it’s possible that this commodity could see a bump of around 10% to $2,000/oz.

Even the central banks are getting in on the yellow craze, as they bought a whopping 399 tonnes of the shiny stuff in Q3 2022, spending a cool $20 billion on it all.

It looks like these banks are trying to boost demand for this worldwide, so it might be time to start stockpiling your own stash as well.

But wait….don’t get too excited just yet!

There’s even a chance that gold could surpass its all-time high if stagflation sticks around, and central banks keep their policies tight. In that case, investors might start to steer clear of all those bonds, equities, and currencies and flock to this safe haven.

Related Article To Read: Silver Likely to Underperform Against Gold in 2023

How to invest in gold?

You might be thinking: Okay I’m sold, but how do I buy gold? As gold is one of the most accessible commodities, there are plenty of ways to jump in: 

1. Buy physical gold – aside from pieces of gold jewelry, gold bullion, which can be in the form of coins or bars, can be purchased from a precious metals dealer or, in certain cases, from a bank or brokerage.

2. Buy gold ETFs – investors who want a more accessible and cost-effective way to invest in gold can consider mutual funds and exchange-traded funds (ETFs) that track the performance of the commodity. An example of such an ETF is SPDR Gold Shares (GLD), which was established in 2004, and can be bought and sold on the New York Stock Exchange like a stock during trading hours.

3. Buy gold futures options – options on gold futures or options on a gold ETF may be suitable for more experienced investors who do not want to risk a large amount of capital. These contracts represent the right to buy or sell an asset (gold in this case) at a certain price for a set period of time.

4. Buy mining stocks – If you can’t get your hands on actual gold, you can always invest in gold mining stocks. However, keep in mind that mining stocks may not always move in tandem with gold prices because mining companies succeed or fail based on their own operating performance and how they deploy capital and make profits.

What can go wrong

As in all things, not everything is shiny, so be careful. 

The worst-case scenario for the yellow metal this year would be more monetary policy tightening and further big interest rate hikes by the Fed, as they refrain from softening monetary conditions during an economic downturn.

However, the onset of a recession may partially counteract the negative impacts of high-interest rates, implying that gold may not suffer as much as it did during last year’s sell-off.

Last year, the US dollar was the true competitor for gold for the title of the best safe haven.

While the US dollar lost some steam towards the end of 2022, investors must still choose whether to maintain gold to protect their portfolios against high inflation and geopolitical tensions, or to sell when global interest rates increase, depending on how the USD moves.

Final Takeaways

For 2023, the Federal Reserve may change its approach to managing the economy as inflation subsides and the US economy weakens.

This could affect the value of the dollar and potentially lead to higher gold prices. 

Gold has already had a strong year-end rally due to speculation about the Fed’s actions and improved economic conditions in China, and this trend may continue in the coming months due to strong demand from central banks. 

After finally breaking free from a downtrend last November, price action for the shiny continues to steadily creep up, with some analysts saying the all-time record for gold can be broken this year. One even says that $4,000/oz is on the cards!

While some economies may fall under recession to begin 2023, certain indicators are showing that this year will be great for this precious metal. So get your bullion ready!

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