As we approach Thanksgiving, we would like to extend our gratitude to all our readers for their unwavering support throughout the year. On this joyous occasion, we wish you a delightful celebration filled with happiness and blessings. Now, let's delve into the exciting news of the week: gold's impressive performance and its implications for the future.
Gold's Soaring Journey
Earlier this week, gold reached an intra-day trading high of $2,030 on Tuesday, showcasing its potential for growth. Although it couldn't sustain this peak, it closed the day with a substantial $20 gain at $2,020. While a strong dollar has hindered its efforts to maintain the $2,000 mark, there is still upward momentum in its price. This can be attributed to the market's confidence in the Federal Open Market Committee (FOMC) concluding its interest rate hikes and the temporary ceasefire in the Middle East, which, though unconfirmed, has provided a sense of stability.
The Santa Rally Phenomenon
Regardless of the specific reasons driving individuals to consider investing in gold at this moment, all indicators point towards a promising month of December for both gold and silver. Historical data from Saxo Bank reveals that, for the past six years, precious metals have experienced a "Santa Rally," with gold yielding a 4% return and silver delivering a remarkable 7.25% return.
ECB's Financial Stability Review
Recently, the European Central Bank (ECB) released its biannual financial stability review. In this report, the central bank emphasized the need for lenders to strengthen their balance sheets in the coming months. The ECB expressed concern over the increasing levels of loan defaults and late payments in the eurozone, which can be attributed to the unprecedented rise in interest rates to 450 basis points. While the ECB reassured that the Eurozone banking system is in a favorable position, it also acknowledged that rising funding costs and loan losses will impact profitability.
Market Expectations and Monetary Policies
Similar to the FOMC, the markets are pricing in the belief that there will be no further rate hikes. However, monetary policy committees are cautious about confirming this, as it could lead to a rapid loosening of financial conditions. As a result, the markets are eagerly awaiting official announcements.
A Glimpse into 2023
Thanksgiving marks the beginning of the festive season, with just over a month remaining before we bid farewell to 2023. As we approach year-end, large institutions are presenting their expectations for the upcoming year. Goldman Sachs, in particular, has gained recognition for its accurate predictions in the past. The renowned bank is optimistic about significant gains in the major stock indexes and foresees a soft landing. They predict a decline in inflation due to interest rates and do not anticipate any major fallout. Additionally, they believe that both inflation and interest rates have peaked, with no further rate hikes expected from major central banks.
Gold's Resilience and Role as a Safe Haven
While Goldman Sachs' positive outlook may seem unfavorable for gold, it is, in fact, quite the opposite. Gold has demonstrated remarkable resilience in the face of rising interest rates and falling inflation over the past year. Investors, including central banks, are starting to view gold as a safe haven asset for liquidity and stability, rather than solely for its returns. This shift in perception bodes well for the long-term prospects of gold.
Political Developments and Their Potential Impact
Turning our attention to recent political events, two elections have the potential to disrupt the status quo. In Argentina, libertarian economist and TV presenter Javier Milei emerged victorious with 56% of the vote. His support primarily came from the youth demographic, who have been significantly affected by the country's staggering 142% inflation rate. Milei, known as "El Peluca" (the wig) and "El Loco" (the madman), advocates for abolishing the Argentinian peso and adopting the US dollar. This paradoxical approach from a libertarian perspective raises eyebrows, as it entails surrendering a country's monetary independence to the US. Regardless, Milei's victory is expected to create ripples in the political landscape.
The second election of note is the one that unfolded in the Netherlands, where Geert Wilders emerged triumphant. Wilders' Freedom Party doubled its number of seats in Parliament. Now, Wilders faces the challenge of forming a coalition, a process that could take several months. Regardless of the outcome, this election outcome could have implications for the Eurozone. While Wilders downplayed his previous calls for a "Nexit" (Netherlands' exit from the EU), his skepticism towards the EU raises questions about the future dynamics of the region.
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Frequently Asked Questions
What Is a Precious Metal IRA?
A precious metal IRA allows you to diversify your retirement savings into gold, silver, platinum, palladium, rhodium, iridium, osmium, and other rare metals. These are “precious metals” because they are hard to find, and therefore very valuable. They make excellent investments for your money and help you protect your future from inflation and economic instability.
Bullion can be bought through many channels, including online retailers, large coins dealers, and some grocery shops.
An IRA for precious metals allows you to directly invest in bullion instead of purchasing stock shares. This ensures that you will receive dividends each and every year.
Precious Metal IRAs don’t require paperwork nor have annual fees. Instead, your gains are subject to a small tax. Plus, you can access your funds whenever you like.
Is gold buying a good retirement option?
While buying gold as an investment may seem unattractive at first glance it becomes worth the effort when you consider how much gold is consumed worldwide each year.
Physical bullion bars are the most popular way to invest in gold. But there are many other options for investing in gold. It's best to thoroughly research all options before you make a decision.
If you don’t have the funds to invest in safe places, such as a safe deposit box or mining equipment companies, buying shares of these companies might be a better investment. If you need cash flow from an investment, purchasing gold stocks is a good choice.
ETFs allow you to invest in exchange-traded funds. These funds give you exposure, but not actual gold, by investing in gold-related securities. These ETFs often include stocks of gold miners, precious metals refiners, and commodity trading companies.
What precious metal is best for investing?
This question depends on how risky you are willing to take, and what return you want. Gold has been traditionally considered a haven investment, but it's not always the most profitable choice. If you are looking for quick profits, gold might not be the right investment. Silver is a better investment if you have patience and the time to do it.
Gold is the best investment if you aren't looking to get rich quick. If you want to invest in long-term, steady returns, silver is a better choice.
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Gold IRA – Add Sparkle to Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- Yahoo Finance provides information about Barrick Gold Corporation's (GOLD) stock price, news, quote, and history.
- 7 U.S. Code SS7 – Designation boards of trade as contract market authorities
- 26 U.S. Code SS 408 – Individual retirement accounts
- Saddam Hussein's InvasionHelped Uncage a Bear in 1990 – WSJ
- Want to Keep Gold in Your IRA at Home? It's not legal – WSJ
The History of Gold as an Asset
From the ancient days to the early 20th Century, gold was a common currency. It was universally accepted and loved for its beauty, durability, purity and divisibility. It was also traded internationally due to its high value. There was no international standard for measuring gold at that time, so different weights and measures were used around the world. One pound sterling in England was equivalent to 24 carats silver, while one livre tournois in France was equal 25 carats. In Germany, one mark was equivalent to 28 carats.
In the 1860s, the United States began issuing American coins made up of 90% copper, 10% zinc, and 0.942 fine gold. This led to a decrease of demand for foreign currencies which in turn caused their prices to rise. The United States began minting large quantities gold coins at this time, which led to a drop in the price. Due to the excessive amount of money flowing into the United States, they had to find a way for them to repay some of their debt. To do this, they decided that some of their excess gold would be sold back to Europe.
Since most European countries were not confident in the U.S. dollar they began accepting gold as payment. Many European countries began to use paper money and stopped accepting gold as payment after World War I. The price of gold has risen significantly since then. Today, although the price fluctuates, gold remains one of the safest investments you can make.
By: Dave Russell
Title: Gold: A Promising Seasonal Rally and the Evolution of Currency
Sourced From: news.goldcore.com/gold-a-seasonal-rally-and-the-future-of-money/
Published Date: Thu, 23 Nov 2023 16:25:40 +0000