Gold continues to shine as a major asset in an uncertain economic and geopolitical environment. Several factors sustain this trend, both through physical demand and the opportunities offered by gold mining. Here’s why this precious metal remains a central pillar of investment portfolios.
Since the beginning of the year, the price of gold has reached historic records, peaking at over $2,685 in September. This impressive surge is primarily driven by the central banks of emerging countries. These institutions have accumulated over 1,000 tons of gold in 2023, an unprecedented volume. Their strategy aims to reduce reliance on the US dollar and diversify reserves in response to currency fluctuations.
Moreover, the decline in US interest rates has strengthened the appeal of gold. As the ultimate safe haven asset, gold benefits from arbitrage between the precious metal and other asset classes, particularly bonds, in an environment of low yields.
Gold’s status as a safe haven remains undisputed. Commercial tensions and geopolitical conflicts, such as those in Ukraine and the Middle East, have amplified its protective role. During uncertain periods, investors flock to this precious metal, driving its demand and price higher. Forecasts suggest that gold could reach between $2,700 and $3,000 per ounce by 2025.
Beyond physical gold, gold mines present significant appreciation opportunities. With record margins and strong results, gold mining companies remain attractively valued. Analysts predict a potential 25% increase in mining stock values, particularly if gold prices continue to rise.
Gold also holds strategic value for investors seeking diversification. With low correlation to other asset classes, it acts as a stabilizer for portfolios, reducing overall volatility. By investing in products such as bullion, coins, or specialized funds, investors can effectively diversify their holdings while mitigating risks.
In conclusion in a world marked by increasing economic and geopolitical uncertainties, gold asserts itself as an essential safe haven and a strategic lever for investment portfolios. Whether through physical gold or investments in gold mining, the precious metal retains its luster. By 2025, it is expected to further solidify its central role in global financial markets.
Column written by Benoit Frayer