Veteran American investor Jim Rogers on Wednesday said that gold prices may go very high if the stock market crashes globally in the coming months. In times of volatility in the equity market, investors lean towards gold due to its safe haven status. Expressing similar views, Rogers told Business Today TV Managing EditorSiddharth Zarabi that the investors should not sell their gold as it might appreciate to a greater level in the coming days.
"Gold prices have been down for many years. In the recent months, it started moving. Whenever a commodity, which has been static for a long period, starts moving, it gathers momentum. That's what is happening with gold right now. The momentum is building and who knows how high the gold rates will go," Rogers told Business Today TV.
He added: "I am expecting problems in the equity market to escalate in the coming months. Whenever we have problems in the equity market, many people will turn to gold and silver as protection. I am not selling my gold and silver. If possible, if the rates come down, I will buy more."
Gold prices have been experiencing a significant surge in 2024, with a remarkable rally that has propelled them to an unprecedented all-time high of over Rs 73,000 per 10 gm. This surge represents an impressive increase of approximately 21.1% within the span of just one year.
In the face of global political and economic instability, gold, of late, has become a preferred asset for investors, experiencing a substantial increase in value. This surge in gold prices has been catalysed by the military actions of Russia in Ukraine and the ongoing tensions between Israel and Palestine. Nonetheless, the sustained and robust appreciation of gold's value, reaching over $2,400 an ounce, can be largely attributed to the impact of China's economic activities.
On central banks buying gold in the current market, Rogers said that them buying gold means word of caution. "Central banks often sell gold for their own use. But if they are not selling but buying, who knows they might be looking at turmoil coming to the financial markets."
According to the report by the World Gold Council (WGC), central Banks' worldwide purchases of gold surged to 1000 tons in 2022, doubling the annual average of 500 tons observed over the past few years. This elevated level of acquisition continued through 2023.
The Reserve Bank of India's (RBI) gold reserves rose to 822 trillion, which is its highest in any quarter. It bought 8.7 tonne of gold in January 2024, making it the largest purchase by the central bank since July 2022. The RBI’s gold holding has climbed to 812.3 tonne in January, from 803.58 tonne in December 2023, according to the World Gold Council data.
RBI started the acquisition of gold in 2018. Prior to this, its last major purchase was a 200-tonne addition in 2009 amidst the worldwide financial crisis. In the initial ten months of the ongoing fiscal year, the central bank has increased its gold reserves by approximately 17.7 tonnes.
Price-wise, gold was steady on Wednesday, as market participants awaiting fresh cues from US Federal Reserve officials for further clarity on the timeline for potential interest rate cuts. Spot gold held its ground at $2,314.29 per ounce, as of 0037 GMT. U.S. gold futures lost 0.1% to $2,322.90. A year ago, the price of spot gold was trading at $2000 per ounce.
In India, gold prices on the MCX were around Rs 71,163 per 10 grams on Wednesday, hitting an intraday low of Rs 70,901.
FAQs
Generally speaking, gold and equity have an inverse relationship. This means, that when the gold price goes up, prices in the stock market will fall and vice versa. Historically it has been observed that when the stock market is most pessimistic, gold performs very well.
Does gold go up in a financial crisis? ›
2 As Chairman Bernanke stated, gold prices can act as an indicator of the health of the economy. A rise in the price of gold may be a signal that the economy is struggling. As a result, in times of either a crisis or inflation, many investors turn to gold to protect their principal.
Is gold a good investment if the market crashes? ›
Gold is consistently in demand around the world, so a recession in any one region is unlikely to skew its international value. In the case of a global recession, gold is still seen as a valuable commodity because of its liquidity, and it is an easy asset to cash in on when the markets are down.
How high will gold go in 2024? ›
Highlights and Key Points. Many analysts offer a positive outlook for gold in 2024, expecting it to trade between $2,421.00 and $2,651.00.
Is gold good during a recession? ›
Gold tends to do well in absolute and relative terms during US recessions; gold equities have done even better.
What was the price of gold during the Great Depression? ›
According to data from Macrotrends, gold was valued at $20.63 per ounce in 1929. This represents the start of the Great Depression. However, the price of gold climbed to $34.69 per ounce after the government raised the fixed rate in an effort to stabilize the economy.
Will gold ever lose its value? ›
Gold has been used as a form of money for centuries and its value does not depreciate over time. The value of gold tends to increase over time due to its limited supply.
Is buying gold a bad idea? ›
There are several risks to investing in gold, including as follows: Price volatility: The price of gold can be volatile, and it may fluctuate significantly over short periods. This can make it difficult to predict its value and can make it a risky investment.
Do you lose all your money if the stock market crashes? ›
Again, you technically don't lose any money in the stock market unless you sell your investments. If you simply hold your stocks until the market rebounds, your stocks should regain their value. The key is to ensure you're investing in strong stocks that have the ability to weather market turbulence.
What is the safest investment if the stock market crashes? ›
Buy Bonds during a Market Crash
Government bonds are generally considered the safest investment, though they are decidedly unsexy and usually offer meager returns compared to stocks and even other bonds.
Global central banks boosted their gold purchases to more than 1,000 tons per year in both 2022 and 2023, with the buying dominated by emerging market central banks, according to the World Gold Council.
Will gold go up to $3,000? ›
Gold could rally to $3,000 over the next 12-18 months, according to Bank of America.
What will gold be worth in 5 years? ›
With a keen eye for economic trends and market cycles, Kiyosaki's forecasts offer valuable insights for precious metals investors. Kiyosaki presents a nuanced forecast for gold prices, predicting them to reach $3,700 in 2024 and $5,000 in 2025.
How much would gold be worth in 10 years? ›
Vijay Marolia, money manager and managing partner at Regal Point Capital, expects the price of gold to be "at least" $3,000 an ounce in 10 years (the price of gold today is around $2,000 an ounce).
Can you lose investing in gold? ›
However, gold is typically a poor investment option when the economy is strong. It will often lose money during these periods as investors sell gold to put their money in the stock market and other growth assets. In the long run, gold has a significantly lower average annual return than stocks.
Is it better to invest in gold or stocks? ›
Stocks have generally performed better than gold over the years, but there can be exceptions. Looking back 20 years, for example, gold has outperformed the S&P 500.
What is the 20 year return of gold? ›
As of December 2023, gold had an average 20-year return rate of 8.86 percent, which was only slightly behind U.S. stocks with a rate of 10.27 return rate.
Is gold tied to the stock market? ›
Low price-correlation with major stock indexes: Gold stock returns are far more closely correlated with gold bullion returns than they are with the returns of the broader stock market, which can potentially make them an effective hedge against market trends.
