The drums of a new financial crisis restore the shine to gold

Gold shines again in the midst of uncertainty, between fears of a new financial crisis and uncertainty about the economic situation. Futures accumulated gains of more than 5% this week, approaching $2,000 an ounce. As for the price of ‘Don Dinero’, that powerful gentleman who glosses Francisco de Quevedo in an unforgettable poem, only 2% was recorded on Friday. Specifically, a week ago, gold was at 1,867.20 euros/ounce while this Friday it was around $1,981. If we go back to the beginning of this month, it stood at 1854.6 dollars. “This does not mean that when the stock market falls by 20, gold rises by 20. Simply when the stock markets fall by 20, gold does not fall or rises a little,” warns XTB analyst Joaquín Robles.

The experts and analysts consulted coincide in glossing over the characteristics that make gold a tempting refuge in times of uncertainty: liquidity and its good behavior in this type of context. “The problem is that gold is very volatile depending on the economic situation, when it improves people get out of gold,” explains Javier Niederleytner, a professor at the IEB (Institute for Stock Market Studies). That is, warn this expert, there may be “a correction” in its value if the conflict in Ukraine will end today. “Gold is interesting to secure capital, because it will never collapse,” insists Niederleytner, who is a professor at the IEB’s Master’s in Stock Markets and Markets.

Where is the gold ceiling?

But does gold have a ceiling? This is the million dollar question, because Niederleytner avoids making forecasts in the face of real uncertainty and the nervousness of many investors who are quick to undo positions quickly, XTB analyst Joaquín Robles has pointed out that, once “when the market calms down a bit, it could be between 1,850 and 1,900 dollars an ounce. I don’t think it will reach 2,000 dollars.” What everyone agrees is that gold is a good indicator of the mood of many investors.

Another dilemma for any investor: physical gold or investment through other instruments such as ETFs (investment funds that replicate the evolution of an index or basket of values)? Operators specialized in the sale of gold such as Degussa have been insisting on the diversification of investments and, above all, they value characteristics such as the elasticity of its price and its demand for various activities such as jewelry.

In this sense, Niederleytner has agreed that in both cases they are “absolutely liquid products, the only thing is that you cannot sell physical gold from home.” For Robles (XTB) gold is, above all, a “refuge or store of value” and shows his preference for an ETF (Exchange Traded Funds) that replicates the behavior of this highly desired metal. The analyst has explained that, through this type of funds, you can invest a certain capital (in euros, for example) and sell it later “at the price per ounce, there is a ‘spread’ (difference between the acquisition price and that of sale) but it is less”. In his opinion, this type of product allows knowing the liquidity that will be available and how much they could offer me for that gold. “It is the best option for a retail investor,” he believes compared to physical gold, which he sees as a little more complex to liquidate.

In any case, the experts consulted add, gold is an interesting ingredient for any portfolio that seeks to be diversified. ‘Mr Dinero’, a powerful lord, can help ensure a certain level of liquidity for times of need. “If you have more than eight assets, you can include it as one more action,” says Joaquín Robles (XTB) who advises having “between 5 or 10%” in gold and warns that in this type of portfolio, not all values ​​have to earn to go well “In a diversified portfolio, you can’t expect to win everything. You’re going to suffer in some and you’ll do well in others. You always have to have some participation that offers you exit windows,” he concludes.

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