Gazimal | The Image Bank | Getty Images
This year ranks as one of the best on record for investors in the precious metal, with futures prices up almost 24% for 2020
Can gold keep going?
This year ranks as one of the best on record for investors in the precious metal, with futures prices up almost 24% for 2020 after hitting an all-time high in August.
Though gold’s detractors through the ages are numerous and prominent, including the likes of Warren Buffett and John Bogle, the events of this year are giving new life to those who insist the arc of financial history points toward the inevitable debasement of currencies like the dollar. Bullish investors contend that trend means new highs for gold are in store.
Gold has been a prime beneficiary of the Federal Reserve’s determination to leave borrowing costs at historically low levels to spur the economy after the shock of Covid-19. Chairman Jerome Powell formalized that stance in August, saying the central bank had dropped its longstanding practice of pre-emptively raising rates to head off higher inflation.
The prospect of the Fed pinning interest rates near zero for years to come and allowing inflation to run hot helped pull so-called real yields
into negative territory. This means investors expect to lose money,
after accounting for inflation, if they buy 10-year U.S. Treasurys and
hold them until maturity.
In such an environment, money managers say the precious metal has lived
up to its status as a haven, shielding investors in a year when stocks
have been racked by volatility.
“[Gold] has thousands of years of a track record of offering some form of protection against the unexpected,” said George Milling-Stanley, chief gold
strategist at State Street Global Advisors. “That’s worth having.”
For decades after Paul Volcker’s Fed raised interest rates to tame inflation in the early 1980s, boosting real yields, the fact that gold paid no dividend or coupon counted against it. Now, with real yields on government bonds back below zero, gold’s lack of income isn’t such a drawback.
The metal’s price surpassed $2,000 a troy ounce for the first time ever this quarter, a milestone in a bull market that some say began in 2015 and climbed to giddy heights after Covid-19 kneecapped the world economy this spring. Gold has room to keep rising, some say.
The price would have to climb another 43% from its late-August
level, crossing $2,800 an ounce, to top its peak from early 1980, after
adjusting for rising consumer prices in the four decades since then.
Fueled by runaway inflation, the Iranian hostage crisis and the Soviet
Union’s invasion of Afghanistan, prices crested at $850 in the London
market on Jan. 21, 1980. That remains their all-time high in
Moves in real yields explain 72% of swings in the gold price over the past 12 months, according to analysis by Michael Sneyd, head of macro quantitative and derivative strategy at BNP Paribas. Changes in inflation expectations accounted for another 21%.
Sliding yields have given bullion, which is denominated in dollars, an additional boost by denting the U.S. currency. The WSJ Dollar Index, which tracks the greenback against several other currencies, fell for five straight months through August. Though the dollar has since strengthened, gold bulls say pressure is bound to intensify.
The greenback’s role as the world’s reserve currency is being called into question by some gold bulls, including analysts at Goldman Sachs Group. Gold is the currency of last resort, especially when governments are debasing fiat currencies and pushing real interest rates to record lows, the analysts wrote in July.
Bond yields have burnished gold in another way. Since yields move inversely to prices, the fact they are so low means Treasurys are unusually expensive. Many money managers worry government bonds, traditionally owned as a buffer, won’t have much headroom to rise if stocks take another tumble.
Investors like Michael Kelly, global head of multiasset at PineBridge Investments, are on the hunt for other assets that zig when stocks zag. “This is crystal clear: Financial repression is coming even to the U.S. and the U.K. and there will be negative real rates as far as the eye can see,” Mr. Kelly said. “That supercharges gold.”
Gold has done a good job at smoothing out returns in recent decades,
according to Hilary Till, principal at Premia Research LLC, who thinks
money managers should consider investing in bullion as a counterweight
Take a hypothetical fund that invested 30% in a basket of stocks tracking the S&P 500 index, 30% in gold futures and 40% in 10-year Treasurys at the end of 1999. This portfolio earned compound total returns of 7.2% a year through 2019, Ms. Till calculates. Its worst result was to lose 2.3% in 2015. In contrast, a portfolio with 60% stocks and 40% bonds earned 6.6% a year and shed 14% in 2008.
For others, however, many of the arguments made in favor of investing in gold don’t stand up to scrutiny.
This year’s surge in prices of the precious metal coincided with a rush of speculative trading in derivatives and shares of companies with little or no record of making profits. Gold’s advance is another symptom of risk-taking encouraged by lavish economic stimulus and enabled by easy access to financial markets for inexperienced traders, skeptics suggest.
“It’s still mostly speculation,” said Simon Mikhailovich, co-founder of the Bullion Reserve. “To me, that’s not the point of owning gold.”
Investors are seeking exposure to gold prices through financial products such as exchange-traded funds rather than direct ownership of gold, which is the ultimate haven because it sits outside the financial system, Mr. Mikhailovich added.
Exchange-traded funds backed by gold, which allow investors to bet on bullion prices with the ease of buying a stock, have become wildly popular. Investors poured money into the funds for the ninth straight month in August, according to the World Gold Council. ETFs now sit on a hoard of gold weighing 3,824.05 metric tons, more than any central bank other than the Fed.
There is no evidence that gold acts as a reliable hedge against inflation over time periods other than those spanning centuries, said Campbell Harvey, a finance professor at Duke University, citing a 2013 paper that he co-wrote. Nor has the idea of owning bullion in case the U.S. government defaults made sense since President Nixon ended the convertibility of dollars into gold in 1971, according to Prof. Harvey.
“This is basically a speculative situation,” he said. “Gold is no different from equities or cryptocurrencies.”
—Pat Minczeski contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com
HAVE YOU LOST YOUR HARD EARNED FUNDS TO THE WRONG HANDS?ReplyDelete
MEET THE PROFESSIONAL HACKERS FOR HIRE TODAY.
⏱️ 3min Read
�� Hiring a professional hacker has been one of the world's most technical valued navigating information.
•Recovery Of Lost Funds,
•Mobile Phone Hack.(Catching A Cheating Spouse).
•Credit Score Upgrade,
VARIOUS HACKTIVITIES via
High prolific information and Priviledges comes rare as it has been understood that what people do not see, they will never know. The affirmative ability to convey a profitable information Systematically is the majoy factor to success.
Welcome to the Global KOS hacking agency where every request on hacking related issues are fixed within a short period of time.
When you wonder “which hacking company should I hire, the first aspect that should concern you is Sincerity. Secondly, Rapid response. Clearly, you want to embark for services that povides swift response, With our astonishing Hackers, you will be glad to find out that our services Implies precision and action.
This post is definitely for those who are willing to turn their lives around for the better, either financial-wise, relationship-wise or businesses.
The manual Operation of this hackers is to potentially deploy a distinguished hacking techniques to penetrating computers.
If your shoe fits in any of the services below, you will be assigned to a designated professional hacker who is systematically known for operating on a dark web V-link protocol.
Providing value added services to clients as a hacker has been our sustaining goal.
Are you faced with cyber challenges like
��Recovery of lost funds:✅(BITCOIN INVESTMENTS, BINARY OPTIONS, LOAN AND TRADING FOREX WITH FORGERY BROKERS.) ��️I would try my possible best to shortly explain this in particular.
This shocking study points to one harsh reality we all face today. It saddens our mind when client expresses annoyance or dissatisfaction of unethical behaviours of scammers. We have striven to make tenacious efforts to help those who are victims of this flees get off their traumatic feeling of loss. The cyber security technique used to retrieving back the victims stolen funds is the application of a diverse intercall XX breacher software enables you track the data location of a scammer. Extracting every informations on the con database. Every information required by the Global KOS would be used to tracking every transaction, time and location of the scammer. This is acheived using the systematic courier tracking base method•
However, there are secret cyber infiltrators called brokers and doom. The particular system used by this scammers permeates them to manupulate targets digital trading system or monetary fund based accounts. Strictly using a dark web rob to diverting successful trades into a negative outcome. This process bends to thier advantage while investors results to losing massive amount of money. An act of gaining access to an organization or databased system to cause damages. We have worked so hard to ensure our services gives you a 100% trading success to recover all your losses•
�� HACKING A MOBILE PHONE:.✅ Do you think you are being cheated on? Curious to know what your lover is up to online? This type of hack helps you track every movement of your cheater as we are bent on helping you gain full remote access into the cheater's mobile phone using a Trojan breach cracking system to penetrate their social media platforms like Facebook, whatsapp, snapchat etc.
The company is large enough to provide comprehensive range of services such as•
• Email hacks��
• Hacking of websites.��
• Uber free payment hacks.��
Our strength is based on the ability to help fix cyber problems by bringing together active cyber hacking professionals in the GlobalkOS to work with.
On the other hand she might have found a guy who she is seeing so i feel you should hack the phone because some women are mischievous they keep secret and find a way to move out of this i feel there is someone she is seeing so you can contact WWW.HACKINTECHNOLOGY.COM and see so you can have a concrete reason so its up to you just a piece of advise from a rea life similar problemReplyDelete