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Gold is shining in the new geopolitical world

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Rainer Michael Preiss
21.01.23 17:40
963
One skill of the seasoned investor is to distinguish what is consensus and what is not? construct robust global portfolios and asset allocation overweight decisions accordingly.

Just because its consensus does not make it wrong is an old and profitable Wall Street saying and in 2023 this most probably applies to GOLD. the vast majority of gold and silver analysts forecast strong increases in 2023.

The back of the U.S. dollar says "In God We Trust." However, for an increasing number of investors in 2023 and close to 1 year into the sad and unfortunate war in Ukraine, the motto increasingly is "In Gold We Trust," as the precious metal could turn into a new major bull market this year. In my view the new wide trading range of gold reach between $2,500 and $4,000 this year 2023.

Many factors indicate that the precious metals are likely to break out of the current consolidation range. In this context, the main thing to watch out for is what the Fed will do at its upcoming meeting on Feb. 1.

On the back of the United States dollar, it says in God we trust. In 2023 & beyond more global investors and central banks might follow the timeless & priceless advice of in gold we trust

Gold has been hard currency honest money throughout wars and inflation and forms a core part of strategic asset allocation.

trust in bitcoin & crypto has been damaged by FTX scandal , gold’s role as honest money not belonging to any government or political part is rising

Commodities will dictate the new world order in the future, including gold and oil. If Russia were to offset the fixed price of $60 by offering two barrels of oil in exchange for one gram of gold, gold prices would double. If gold were to go from $1,800 to around $3,600, would increase the value of Russia's gold reserves and gold production at home and in a number of countries in Africa. If or When Putin introduces the Petro Gold, gold will skyrocket and crack most of Western banks.

If gold continues to rally, which looks likely, the next target for the bulls is the resistance area at $2,000 per ounce. After that, the key area is the all-time high of $2075, which was successfully defended in early March last year.

Conventional wisdom says that gold is the anti-dollar. That is, whenever the greenback is strong, gold is weak, and vice versa. Gold prices react inversely to U.S. dollar real yields. But Gold is not about inflation on its own, and it's not about interest rates on its own. But it's about the relationship between the two.

Today, investors are increasingly viewing gold as "safe money" at a time when Janet Yellen publicly stated “United States is taking extraordinary measures to avoid default as U.S. hits debt limit”
Gold is an economic constant. It will never become worthless, nor will it decline due to inflation over time like a fiat currency. Gold carries no risk of default, nor can it go bankrupt. So, when stocks fall, gold tends to hold its ground (or go up). It's great portfolio insurance.

Gold had underperformed during the time the fed raised interest rates but might outperform when the fed pivots and global investor focus switches to USA debt sustainability and the politically charged debt limit discussions. Economic data continues to complicate investors efforts to anticipate the Fed’s rate path, which will be crucial to gold this year. So far it seems investors in gold exchange- traded funds have been reluctant to back the rally with fresh money, while hedge funds trading Comex futures have gradually raised their bullish bets.

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