In the words of one market strategist and chief investment officer, Robert Minter, investors should have a higher percentage of gold in their portfolios. Because with all the uncertainty in the world, gold has a place to circulate in the global economy. And the status of the U.S. dollar as a reserve currency is now declining.
One of the reasons is that once the Fed stops its aggressive monetary policy, the price of gold will rise even more—it’s only a matter of time.
The Federal Reserve plans to implement the last 25 basis points rate hike in May. Such transitional periods have historically always been optimistic for gold. When the Federal Reserve paused in 2000, gold rose by 55%; when they paused in 2006, gold rose by 230%, and when they did again in 2008, gold rose 70%. The Federal Reserve is planning to pause again to prevent the U.S. economy from falling into recession.
During transitional periods, markets are always volatile, and gold can act as an anchor, providing some stability for investors. The precious metal is expected to continue outperforming the S&P 500 as the Federal Reserve continues to tighten its monetary policy and then is forced to cut rates.
This year, the S&P 500 has grown by 6%, while gold prices have risen nearly 9%. This shows how uncertain the market situation is. When the market recovers, gold is not supposed to outperform the S&P 500
Moreover, it’s not just investors looking to hedge against market uncertainty and inflation; central banks have an insatiable appetite for gold, having bought 1,136 tons last year. This year, central banks purchased 125 tons of gold, which marked the strongest start to the year in more than a decade. The demand from central banks creates solid value in the market, and this trend is unlikely to stop anytime soon.
They are buying gold because it is an attractive instrument for diversification compared to the U.S. dollar. The U.S. government used the U.S. dollar in its sanctions against Russia to dictate foreign policy, prompting many countries to form alliances with China.
And the last reason why gold is a good investment is the banking crisis, during which the Federal Reserve tightened interest rates again, releasing liquidity into the market. Last month, the Federal Reserve provided $323.3 billion in credit through its three credit mechanisms. Historically, when the Federal Reserve’s balance grows, gold also grows.
The material has been provided by InstaForex Company – www.instaforex.com
In the words of one market strategist and chief investment officer, Robert Minter, investors should have a higher percentage of gold in their portfolios. Because with all the uncertainty in the world, gold has a place to circulate in the global economy. And the status of the U.S. dollar as a reserve currency is now declining.
One of the reasons is that once the Fed stops its aggressive monetary policy, the price of gold will rise even more—it’s only a matter of time.
The Federal Reserve plans to implement the last 25 basis points rate hike in May. Such transitional periods have historically always been optimistic for gold. When the Federal Reserve paused in 2000, gold rose by 55%; when they paused in 2006, gold rose by 230%, and when they did again in 2008, gold rose 70%. The Federal Reserve is planning to pause again to prevent the U.S. economy from falling into recession.
During transitional periods, markets are always volatile, and gold can act as an anchor, providing some stability for investors. The precious metal is expected to continue outperforming the S&P 500 as the Federal Reserve continues to tighten its monetary policy and then is forced to cut rates.
This year, the S&P 500 has grown by 6%, while gold prices have risen nearly 9%. This shows how uncertain the market situation is. When the market recovers, gold is not supposed to outperform the S&P 500
Moreover, it’s not just investors looking to hedge against market uncertainty and inflation; central banks have an insatiable appetite for gold, having bought 1,136 tons last year. This year, central banks purchased 125 tons of gold, which marked the strongest start to the year in more than a decade. The demand from central banks creates solid value in the market, and this trend is unlikely to stop anytime soon.
They are buying gold because it is an attractive instrument for diversification compared to the U.S. dollar. The U.S. government used the U.S. dollar in its sanctions against Russia to dictate foreign policy, prompting many countries to form alliances with China.
And the last reason why gold is a good investment is the banking crisis, during which the Federal Reserve tightened interest rates again, releasing liquidity into the market. Last month, the Federal Reserve provided $323.3 billion in credit through its three credit mechanisms. Historically, when the Federal Reserve’s balance grows, gold also grows.
The material has been provided by InstaForex Company – www.instaforex.com
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