Gold 1869,86
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EURUSD 1,1771
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DJIA 29141
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OIL.WTI 41,53
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DAX 13230,23
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Many were frightened by the strong fall in gold on Monday and, for sure, someone began to doubt the future of this trading instrument. Why did this happen and what awaits us next?
Gold
Amidst the euphoria of Pfizer news, investors rushed into risky assets and gold was being sold in large volumes. Even though the price per ounce fell by $100, the level of $1860 survived.
Everyone knows that US government bonds are the safest asset for investment, but how profitable is it to invest in them?
– Ten-year bonds have a yield of around 0.9% and the projected average US dollar inflation is 2.5%.
– yields on annual bonds are around 0.2% and annual inflation in the USA is 1.4%
Looking at these figures, it can be estimated that a government bond investor loses around 1.5% of the real value of assets per year, taking into account the difference between yield and inflation. Considering that interest rates are nowhere to be lowered, bonds cannot grow and the yield cannot be higher than inflation. Investors are therefore increasingly starting to adjust their investment portfolio towards gold and stocks.
Experts estimate that all gold in the world is worth around USD 12 trillion, shares worth USD 90 trillion and bonds worth USD 250 trillion. This means that gold takes up around 3.5% of the value of all investment assets.
The amount of gold in the world cannot grow rapidly as production depends on the capacity of the mining companies. Therefore, in order for gold to take up not 3 but 5 per cent of the investment portfolio, its value must increase from $2,000 to $3,000.
If there are no force majeure events in the world, gold must continue the upward trend over the next few years. All major central banks continue to print money to keep interest rates low and drive inflation up. Of course, this movement will be accompanied by some kickbacks, given skyrocketing inflationary expectations and possible adjustments to central banks’ monetary policy.
What awaits us today?
08.00 UK GDP for 3rd quarter and since the beginning of the year
14.30 Number of initial applications for unemployment benefit in the USA
17.00 US crude oil reserves
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