Gold to Lose its Glitter?
Private sector confidence seems poised to rise. And true to their curmudgeonly character, gold investors will not be happy with broadening gleefulness!
An early mentor of mine use to say, “Whatever is worrying you, the answer is gold”. Worried about a depression, a recession, a run on the U.S. Dollar, a stock market collapse, a debt calamity, a housing bust, a presidential election, a war, or terrorism — Buy Gold! Of course this can’t be true, or the price of gold would be greater than the net worth of Warren Buffet or at least the price of Bitcoin. But it sure feels sometimes like “gold” is the salve for whatever ails an investor.
Currently, the price of gold is at a record high slightly above $2500 after gold investors have enjoyed two nice surges in recent years. From May 2019 to August 2020 (the pandemic panic), gold surged by more than 60% and since the October bear market low in 2022, fueled by chronic recession fears, the price of gold jumped by another 55%! For a few primary reasons, I suspect gold is about to lose its glitter – it seems unlikely to benefit from a cut in interest rates, it has become quite expensive relative to other commodity prices, and a forthcoming rise in private sector confidence should reduce the appeal of this emotional metal.
