The gold market continues to fight below $ 1,900. However, in the long run, an analyst says that there is still a lot of value in the field of precious metals and that investors have risen this year because of low pricing of the risk of recession.
“Gold will continue to shine in 2023”
Degussa’s chief economist Thorsten Polleit says that while investors are trying to protect their purchasing forces and take precautions against increasing economic uncertainty, they expect gold to continue to shine in 2023. Polleit, in the official price estimation, the gold prices rose to $ 2,200 and the average ounce price of 2023 is $ 2,000. At the same time, silver prices expect to peake for around 26 dollars and $ 29 this year.
Polleit says that inflation continues to rise significantly on gold because it continues to be an important threat to consumers and global economy. While consumer prices fall from the high levels seen last summer, Polleit says that the tightening of the Central Bank reduces global real money supply and liquidity in the global economy.
He adds that the fell money supply has the same effect as the consumer prices rising on consumers. Polleit “As the money supply narrows, the price of the goods increases. People still have less purchasing power than a year ago. This will be a great obstacle to growth, or he says.
“Fed’s hawk stance is up to some extent!”
In response to the global Covid-19 epidemic, Thorsten Polleit noted that after releasing large amounts of liquidity in 2020, the central banks around the world are now trying to put back the cini bottle and take the risk of creating a new recession in this process. Meanwhile, since the end of 2019, it should be noted that Federal Reserve has increased by 40 %of M2 money supply. Polleit also says that the money supply of the European Central Bank has increased by 25 %. “There is a lot of liquidity that the central banks need to take back, and this will be painful; It will reduce consumption, or he says.
Kriptokoin.comAs you have followed from this year, the markets have rejected the idea of recession to a great extent because the labor market has remained healthy. However, Polleit says that one reason why investors do not worry about recession is that the Fed’s hawk stance can only go up to some extent. In this direction, Polleit makes the following statement:
The truth is that the markets have no trust that central banks will normalize monetary policies. Markets can no longer operate without a security network provided by central banks. When the problems in the US economy have begun, we will see that the FED rapidly removes this security network.
“This situation cannot be sustained!”
Despite some members of Federal Reserve, Polleit says he did not expect the central bank to increase interest rates to 5 %. If the market turmoil is bad enough, he also adds that he can reduce interest rates at the end of the summer, and to keep the Fed’s more aggressive action under control is important for the growing debt of the US government. Polleit records that it pays about $ 350 billion to close the government’s debt when interest rates fell below 1 %in 2021. The economist makes the following statement:
When the interest rates drop to 5 %and you need to provide funds of $ 31 trillion, you will eventually pay $ 1.2 trillion debt. The American defense budget is only around 800 billion dollars. This is unsustainable.
“Considering the current conditions, gold is still cheap”
Polleit, a natural border in interest rates, says that gold will continue to be an attractive asset. He adds that he has not seen a vital role for government bonds in a traditional portfolio. “I don’t think that bonds are a very good long -term solution. Because real interest rates will remain negative, or he says.
Polleit, about how investors should create their portfolios, says that approximately 60 %of them like to keep them in globally diversified stocks or ETFs and other 40 %in valuable metals. In the casting of the precious metals it has, it states that it will keep less than 70 %and the other 30 %in silver. Finally, Polleit adds:
If you are wondering if the current gold price is a good purchase, I can say that gold is still cheap, given the existing conditions in the long run.
