Gold is portrayed as a safe haven in times of uncertainty and inflation in particular. This is how retailers offer it to small clients as well. In the last quarter, the price of gold fell by more than five percent.
That cryptocurrencies are decliningwhen the world is gripped by nervousness from rising prices and interest rates, which are suffocating the economy and collapsing stock markets, nothing is so surprising. Bitcoin et al and the preserver have not yet become valuable. But the fall in gold prices is quite a surprise.
Shock from the loss of wealth
The price of gold has been at zero since the beginning of the year, falling 5.5 percent in the last quarter. According to the previous assumption of the investment bank Goldman Sachs at that time, a troy ounce of gold should cost $ 2,100, instead of just over $ 1,800, writes Bloomberg. According to the bank’s analysts, this is due to the so-called wealth shock, defined as panic over the loss of wealth. In this case, for emerging market currencies, most Chinese yuanwhich weakened due to ongoing pandemic closures as well as general tensions from inflation and the logistics crisis. The Chinese are the largest buyers of gold in the world. As a result of the war in Ukraine, the Russians also disappeared from the global market, as both gold production and the gold market remain due to sanctions, especially within the country, which buys itself against the ruble by strengthening its own gold.
Nevertheless, the bank’s analysts remain optimisticdid not change their target price for the end of this year at $ 2,500 per ounce.
“The shock of the loss of wealth seems to have peaked and we expect demand for gold in emerging markets to recover in the second half of the year,” analysts said. “Unless there is a liquidity shock, we consider the current weakness in the price of gold to be a good entry point for purchases,” the report said.
Watch out for the gold. You buy for expensive, you only sell at a discount
In an effort to protect their savings from inflation, Czechs are frantically buying gold bars. Economists warn of disappointment that may arise when trying to sell investment gold. Some merchants do not allow repurchases at all, others set the purchase price tens of percent lower than the sale price. “The spread difference should be within five percent. Otherwise, it is an effort to turn the seller, “says BHS chief analyst Štěpán Křeček.
Fund bosses are changing strategy, getting ready for bad times
American asset managers are also afraid of problems from Europe – the crisis will spread like the financial one from 2008. The continent is paying for the stagflation and proximity to the war.
War helps gold. Bitcoin has not proven to be a safe haven, yet
The war in Ukraine has shown what investors consider a safe haven in turbulent times. Gold is, bitcoin is not.
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