Will Gold Return to All-Time Highs in 2023?
The comments below are an edited and abridged synopsis of an article by Michael Kosares
In 2022, gold held its own while the rest of the investment universe was taken to the woodshed. So what will 2023 bring? Will gold return to all-time highs at $2,075? Many analysts think that might be the case, particularly in light of the strong finish to 2022. If gold does return to all-time highs, fund and institutional interest will likely be a key catalyst. Over much of 2022, that sector has been a net seller of gold, as reflected in the 17% reduction in stored gold stockpiles between May and November. However, the last two months of the year hint that a shift might be underway.
“There are no simple answers for the investment community,” says Australia’s sovereign wealth fund, which recently announced its first gold purchases ever. “Traditional approaches have delivered strongly, but it is doubtful they are fit for the purpose in the future… In this kind of environment, there is a real risk of simultaneous slow growth, high unemployment, and rising prices that has some parallels with the stagflationary period that struck developed markets in the 1970s.” The fund questions the effectiveness of the traditional 60/40 portfolio, arguing that an investment shift is necessary to counteract a time of war, inflation and climate change.
Kosares writes: “Investors worldwide rush to gold coins as hedge for the times.”
As economic conditions deteriorate around the world and inflation accelerates, people are turning to gold at attention-grabbing levels—an indication that the metal has not lost its standing as the favoured asset of last resort.
Egyptians are hoarding gold as the purchasing power of their currency plummets. In Pakistan, gold is being pushed to record levels on aggressive investor buying to hedge a possible financial system breakdown. The World Gold Council reports similarly strong demand in other emerging countries, Europe and the United States.
“Demand for gold has never been as high as this year,” says Gerhard Starsich of the Austrian Mint. “At the moment, every gold coin that comes off the coining press has already been sold. Right now, we could sell three times as many as we are able to produce.”