Our forecasts for gold in 2023

Gold, before being an object of investment, was for centuries a sign of success. But its use has been found in many areas. Jewelry, religion, decoration, this is the story of gold!

Where does gold come from ?

The formation of gold is not due to man. On the contrary, there are two natural theories about the existence of gold on earth. The first refers to an explosion of stars which would then have sent precious metals towards the earth, which are found today on the earth's crust. The origin is therefore a supernova which, by exploding, caused a nuclear fusion. The hydrogen was transformed into oxygen, then into carbon, until it became gold.

The second hypothesis determines that gold was formed from a collision between stars, which through nuclear chain reactions created precious metals.

Whether one is seduced by one theory or the other, most of the gold is found in the earth's soil. It is for this reason that gold companies work on extracting gold through mines.

Gold throughout history

We have to go back to the Chalcolithic era to find traces of the first gold excavations. Indeed, at this time, men made objects and jewelry out of gold. This tradition of working with gold has continued over the years. Since Antiquity, gold has become a currency in addition to an object. King Croesus and other Lydian monarchs minted and made small, round objects, which soon came to be called “coins.” From that moment on, gold becomes exchangeable, and takes on a whole new value thanks to trade. Thus, the gold standard and its reserves guaranteed financial transactions across the planet until the end of the 20th century, when it was abandoned in favor of the American dollar.

Now, gold is synonymous with power (the jewels of kings and queens) as well as exploits (Olympic medal, Messi's golden ball, etc.).) or wealth (ingots and coins).

Gold is currently strongly impacted by different economic and geopolitical situations. Safe haven or speculation, what about gold in 2023 ?

The price of gold

The London Bullion Market Association determines the spot price of gold every day. This quote is a snapshot of the state of gold markets around the world. The LBMA thus seeks to regulate supply and demand, to satisfy all stakeholders. However, gold mining and recycling provides a constant supply to the markets. It is therefore demand which causes the price value to vary upwards or downwards, like many other raw materials. The electronics, automotive or medical industries, jewelry companies or even companies dedicated to investment or States create this demand.

Unlike the stock market, gold is not correlated with financial health, company results or political decisions. 

The different ways to invest in gold

Investing in gold can take several ways. Physical or paper, gold has many advantages for portfolio diversification. You can opt for physical gold, investment gold coins or bars. The main advantage is that the price range is large. Indeed, you can buy a coin with or without a premium, a one gram ingot or a 5 kilogram ingot, there is something for all tastes and all budgets.

At the same time, you have the possibility of buying shares of mining companies. More volatile, the return can be significant but remains conditional on the economic health of the company.

Otherwise, ETFs and other trackers track prices and rates backed by gold, to provide you with stronger profitability and better liquidity.

Depending on your investment objective, you can choose physical gold and paper gold for better complementarity.

Variation in the price of the dollar, inflation, rise in rates, geopolitical tensions, there is no shortage of disruptions at the start of 2023. Faced with all this, how does gold react ?

The global geopolitical situation

The war in Ukraine which broke out at the start of 2022 strongly contributed to financial destabilization. It came at the end of a difficult medical period, linked to Covid-19, which had already affected global economies.

High military tensions directly impact the daily lives of French citizens. In this context, the stock market suffered ups and downs throughout last year, which seem to have calmed down since January. Conversely, the price of gold increased to stabilize at around 1,800 euros.

Inflation and the economic situation

The geopolitical crisis has caused energy prices to explode, and created lasting inflation within global economies. To counter this phenomenon, central banks raised rates, which led banks to pass on this increase to loans, particularly real estate loans. This increase in rates, of which bond rates are a part, is good news for investors who see the returns on euro funds getting a new lease of life. However, the flip side is direct for individuals who see the general cost (food, energy, housing, etc.)) increase. Furthermore, the usury rate determined by the Bank of France did not immediately follow this inflation, and many loan application files were refused.

However, at the start of 2023, inflation seems to be calming down and central bank forecasts are all pointing towards a decrease in inflation.

Gold as a safe bet

Investors experienced moments of doubt, and turned to less risky investments to guarantee their assets. The main safe haven is gold. The gold metal enjoys a reputation as a safe haven, because its rate is stable over time. Indeed, uncorrelated with international situations, it guarantees stability which allows protection from inflation and capital losses linked to stock market investors. Furthermore, central banks and certain states have massively purchased gold to protect themselves against economic risks and monetary devaluations.

However, despite its status as a refuge, gold has two main disadvantages. The first is linked to his detention. Once purchased, you must store your gold bar in a secure location. In fact, any movement or knock on your bar can damage it and reduce its value, not to mention the risks of theft and destruction if kept at home. On the other hand, gold helps limit money losses, but is not a product intended for yield. Indeed, its price experiences slight variations outside of crises. You must therefore define objectives in advance before buying gold. Gold investments must correspond to your wealth diversification strategy, whether in physical or paper form.

You want to invest in gold to diversify your savings and secure them ? Gold Union experts support you in your process of purchase of gold bars or bullion coins. You can now find out at the Gold Union agency closest to you, or contact a Gold Union advisor via the e-commerce site.