Thu. Mar 30th, 2023

SEOUL, REPUBLIC OF KOREA: Gold bars are displayed at Shinhan Bank in Seoul on 09 January 2004. Gold … [+] prices hit 544.60 dollars per ounce on January 09, 2006, the highest level since January 1981, owing to geopolitical tensions in the Middle East and reports that China may increase its reserves of the metal. “Geopolitical tensions continue to provide reasons to be positive on gold, with deteriorating situations in both Iran and Iraq, while the possibility of Israels Prime Minister Ariel Sharon not returning to office causes concerns over the Middle East peace progress,” said Barclays Capital analyst Yingxi Yu. AFP PHOTO/JUNG YEON-JE (Photo credit should read JUNG YEON-JE/AFP via Getty Images)
Gold prices will hit new records relatively soon. Investors just need a little patience, according to one of the world’s best precious metals experts.
“We still expect to see record prices over the next, say, five years,” says Jeff Christian, founder and managing partner of commodities consulting firm CPM Group, in a recent video.
He notes that prices for bullion have remained at record levels on an annual average basis last year and so far this year.
The recent price was around $1,752 a troy ounce, down from its record level of $2,067 on August 7, 2020. That was the closing price on just one day. What matters significantly to most investors is the average price, which is what Christian points to as an important metric. And yes, the price is still elevated by historical standards.
Just look at a price chart of the SPDR Gold Shares ( GLD ) exchange-traded fund which holds bars of solid bullion and closely tracks the price of gold. Its clear to see that from late 2020 through today prices have remained high, especially when compared to much of the last decade.
Right now the market is consolidating, or moving sideways, after a significant rally after the government’s response to the COVID-19 pandemic in 2020.
Currently, investors are concerned about a variety of things, Christian says. However, the key is they are less worried than they were a few months ago. For instance, inflation may have peaked and will likely drop down to 4-5%. Second half growth is stronger than in the first half of 2022.
CPM doesn’t see a full blown recession in 2023, and geopolitical tensions are lower than they were.
“There are still a lot of things there [to worry about],” Christian says. Lower levels of cooperation between countries is likely to become fact of life. China has internal tumult. Europe has a new right-wing government in Italy. And in the United Kingdom there is a growing tension between Westminster (the set of the U.K.’s government) and breakaway desires from Scotland.
“There are a lot of problems here,” Christian says.
In other words, its messy out there, and that mess has the potential overtime to cause hiccups across the world.
Those things will be good for gold.


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