Gold's growing reliability, supported by investor's confidence and periodic price increases, pleases the market. However, excessive confidence in the strength of this metal can play a trick with fiat currencies, many of which are in risk of significantly falling.
Analysts say that most currencies, matching the price against gold, will lose. They are confident that the "yellow metal" may experience strong volatility in the short-term, increasing or decreasing in price. However, it will leave many currencies behind in the long term, including the current market leaders.
Moreover, analysts from the US bank Wells Fargo said that gold's growing interest is the other side of distrust towards traditional currencies. The large share of investors considers gold to be the best investment in the long term, the most suitable safe haven for capital, which has no analogues. In support of this, experts turn to history, recalling that gold has existed for more than 5000 years, being the only custodian of values, and paper money is a volatile value. At the same time, they are quite "young" if we consider fiat funds from a time perspective. Thus, experts summarize that not a single currency could survive longer than gold.
The growth of gold is being supported by the decline in global confidence in traditional currencies. Investors prefer the time-tested value, and are also actively investing in the innovation – bitcoin ignoring Fiat money. Wells Fargo believed that there are three key factors causing this: low real rates, which will remain in the long term, the excessive amount of Fiat money in the world (the "printing press" effect) and the widespread weakening of the US currency.
The fact that the gold's value has soared by almost 35% since the beginning of the year, which is not the limit is also one of the reasons to be in favor of this metal. According to the calculations of Joe Foster, an investment strategist, we can expect $ 3,400 per ounce in the near future. The analyst's previous forecast assumed that the price of gold would rise to $ 2000 per ounce, which has successfully overcome. Now, it will have to go through a long correction to further grow.
Currently, it has slightly lost ground. It traded below $ 2,000 per ounce and lost some of its previous gains on the last day of summer. Meanwhile, gold was given $ 1966- $ 1967 per ounce today. Experts warn investors not to count on further correction in gold prices as it is still on its way to recover.
According to the specialists of the Canadian bank TD Securities, the gold market will face a prolonged consolidation that will likely take several months, replacing the correction. If a downward trend prevails in the gold market, experts warn that many investors will get rid of their positions.
However, TD Securities' long-term forecast, which implies a steady rise in gold, remains effective. It is based on the fact that real interest rates will remain low, which will provoke capital flight into precious metals, primarily gold. At the same time, long-term investors benefit from any decline in prices for precious metals, since this allows them to increase investments in it.
According to analysts' observations, gold mining companies are now on the top. Experts recommend taking advantage of the situation and investing in the shares of gold miners since most of them have high growth potential, supported by current conditions. Although the world market is still under present danger of financial and economic risks, gold remains a reliable defensive asset.