Could Gold Hit $3,000 This Year?

Goehring & Rozencwajg Investment management and advisory firm expect gold to hit record highs this year. “I wouldn’t be surprised to see a $3,000 price this year,” said an executive of the firm. “It’s time for people to want to be bullish on gold.”

Leigh Goehring a managing partner at Goehring & Rozencwajg’s firm Investment , shared his outlook for gold in an interview with Kitco News last week. Goehring has 32 years of investing experience specializing in natural resource investments. He co-manages the Goehring & Rozencwajg Resources Fund.

“Gold is going to hit record highs this year,” he began, noting that the metal peaked at $2,050 in August 2020 and again in March last year. The executive told the news outlet:

This year we’re going to break through the all-time high … It’s time for people to want to be bullish on gold.

Are Central Banks Buying Gold?

Central bankers and finance ministers may be all about fiat currency, but behind the scenes central banks’ increasing appetite for gold as a reserve asset. they’re gobbling up the yellow metal at the fastest pace in living memory. In the third quarter, official net gold purchases were approximately 400 tonnes, around $20 billion, the most in over a half-century.

central Banks Have Been Net Buyers of Gold.

Why gold now?

A lot of money has been printed by major central banks. At the same time, the gold prices have not reacted strongly enough. There is highly likely more easing ahead, whilst the inflation rate is at multi-decade highs. Bear in mind that fiat money’s supply is unlimited, whilst gold’s supply is limited. So, gold should rise in money terms.

How to start investing in gold?

You can invest in gold via:

  • Purchasing physical gold

The most common way to invest in physical gold is to purchase gold bullion. Gold bullion refers to investment-grade gold, commonly in the form of bars, ingots, or coins.

  • Gold-linked currency investments

Coined Wall Street’s safe haven asset, gold is able to store its value in real terms amidst volatile Another way to invest in gold is to use gold currency investments. An example of this is to buy gold  as a Commodity-Linked Structured Investment. Using this method, you decide with the bank or broker on the duration of the investment and a base currency – such as USD, SGD, and so on. You will need to agree on a Target Conversion Rate (TCR) to be applied between gold and the base currency. Gold is treated like a currency with a currency code of XAU.

At the end of the investment duration, you will get both principal and coupon in either gold (XAU) or the base currency. If gold (XAU) appreciates against the base currency -for instance, USD –you will be repaid in USD for both the principal and coupon. However, if gold (XAU) falls below the TCR, the investment will get converted and you will be repaid the equivalent of principal and coupon in gold (XAU) converted at TCR.

This method can generate more interest than just holding on to US dollars, for instance, and is ideal for investors who don’t mind being paid in gold (XAU). What are your options if you are repaid in gold? You can then hold on to, sell, or re-invest the gold (XAU) in another commodity-linked currency investment with gold as your base currency or commodity to potentially earn another round of higher coupon.

  • Gold ETFs or unit trusts

Exchange-traded funds (ETFs) offer a way of investing in gold that acts in the same way as stock trading through your brokerage account. 

How do gold ETFs work? ETFs trade on stock exchanges in the same way as individual company stocks. Their prices fluctuate throughout the trading day, unlike mutual funds that settle once daily and can take even longer for settlement. 

Gold ETFs such as the SPDR gold shares (GLD) are designed to track the gold price and are backed by physical gold. A unit of an ETF is equivalent to one gram of the precious metal.

However, gold ETFs are considered high-risk investments as they offer exposure to the price of gold and ownership of the trust managing the fund, rather than ownership of the physical metal.

  • Gold mining stocks

Instead of investing in an asset linked to the gold price directly, you can invest in mining company stocks. If you’re interested in how to invest in gold stocks, you can research companies involved in the gold industry and trade their stocks through your share dealing account. 

As of 25 May 2022, the top three gold mining stocks by market capitalisation were: 

  1. US-based Newmont Mining (NEM) is the only gold company included in the S&P 500 Index (US500).
  2. Barrick Gold (ABX), the second-largest gold mining company in the world, is headquartered in Toronto, Canada.
  3. Franco-Nevada (FNV) is the leading gold-focused royalty and streaming company. It is also headquartered in Toronto, Canada.

However, many other gold mining companies, including Agnico Eagle Mines (AEM), Wheaton Precious Metals (WPM), AngloGold Ashanti (AULGF) are available for trading.

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