Gold as a safe investment: Stocks To Invest In

Gold As a Safe Investment

Updated March 2023

Contrary to popular belief, gold may not be the safe investment it’s often touted. While it may have some value as a hedge against inflation, its historical returns have been lacklustre, and it may not provide the diversification benefits some investors seek. Its price can be subject to wild swings based on market sentiment and geopolitical events, as it has no inherent value.

However, we believe Gold is preparing to make a strong comeback, just as it did from 2003 to 2011. We were bullish during that period but turned negative in 2011. Now, with the dollar set to put in a multi-year top, we believe that Gold is poised for success

Former Resistance has turned into support.

When Gold did trade above 1500 in the year 2020, it did establish a long-term base. The former resistance did finally turn into support. As long as this level isn’t breached on a monthly basis, the outlook will remain bullish.

Furthermore, another bullish long-term factor which is working in favour of Gold is that the central bankers have been stepping up their purchases of Gold, as indicated further below in this story.

If Gold can close at or above 1950 on a monthly basis, it shall pave the way for a test of the ranges from 2200 to 2400. Ultimately, we feel that Gold could trade as high as 3000, but it must overcome certain obstacles. For now, let us see how it handles a break above 1950. The stocks which are mentioned below should perform well when Gold breaks out.

Central purchasing bullion hand over fist

Over the past five years, there has been a significant increase in central banks’ purchase of gold as a reserve asset. According to the World Gold Council, central banks purchased 650 tons of gold in 2019, the highest level in 50 years. This trend continued in 2020, with central banks adding another 273 tons of gold to their reserves. This represents a shift in recent years, as central banks were net sellers of gold from 2008 to 2010.

The trend continued in 2022: According to data compiled by the World Gold Council, central banks have been buying gold fastest since 1967, with China and Russia identified as significant buyers. This move signals a desire by some nations to diversify their reserves away from the US dollar. The WGC’s data shows that demand for gold has exceeded any annual amount in the past 55 years. Recent estimates have surpassed the official reported figures from central banks, leading to speculation about the buyers’ identity and motives. Financial post

Gold as a safe investment: Stocks To Invest in 2023

The reason for dividing our funds into three or more lots is to adopt a diversified approach to investing, with funds allocated across different price ranges and situations. This strategy also emphasizes the importance of monitoring monthly closes and being prepared to withhold funds if the price dips below a certain level.

To maximize your chances for profit, one should aim for entry points that are on the extreme end. Therefore, dividing our funds into a minimum of four lots is recommended. We can deploy one lot when the price range is between 4.20 to 4.40 and another lot when it’s between 3.60 to 3.80. For the remaining two lots, we can either wait for a breakout or invest if the price drops below 3.30.

Investing in the 6.20 to 6.40 range and the 5.40 to 5.60 levels would be an excellent place to start. We recommend deploying another 1/4 of your funds on a monthly close at or above 9.30. This strategy allows for a diversified approach to investing and suggests a focus on monitoring monthly closings to make informed decisions.

Consider dividing your funds into four portions and deploying them strategically. One portion could be deployed in the price range of 99 to 105, another in the range of 89 to 92, and a third portion can be deployed when the monthly closing price is at or above 126. The fourth portion can be saved in case the price dips below 80.

Research on Gold as a safe investment

Here are six well-researched articles discussing gold as a safe investment:

“Why Gold Is A Safe Haven” by Investopedia: This article discusses the historical role of gold as a safe-haven asset and why it is still considered a reliable investment during economic uncertainty.
“The Case for Gold as a Strategic Asset” by World Gold Council: This report examines the benefits of including gold in a well-diversified investment portfolio and how it can help reduce risk and improve overall returns.
“Gold as an investment: Worth the price?” by CNBC: This article discusses the pros and cons of gold and whether it is still a viable, safe-haven asset in today’s economic climate.
“The Role of Gold in an Investment Portfolio” by BlackRock: This report provides a detailed analysis of the historical performance of gold as an investment and how it can be used to enhance portfolio diversification and reduce risk.
“The Economics of Gold Investment” by The Balance: This article explains the economic factors that drive gold prices and why it is considered a safe-haven asset during inflation, deflation, and geopolitical instability periods.
“Why Gold Is the Best Investment in 2021” by Forbes: This article makes a case for why gold should be a part of every investor’s portfolio in 2021, citing its ability to hedge against inflation and currency devaluation.

Articles

Additional sources on gold as a safe investment: