Should we expect growth in 2023?

Gold as a financial asset is becoming quite attractive again. Quotations of December contracts for this precious metal on the New York Mercantile Exchange on Friday, December 2, reached $1,800 per troy ounce. Bank of America experts believe that in 2023 the price of an ounce could reach $2,000. Whether Russians should consider gold as an investment and how quickly such investments will pay off, Mark Goykhman, chief analyst at TeleTrade, told Moskovskaya Pravda.

In times of economic upheavals and rising inflation, gold has traditionally been perceived as a “defensive asset”. In Russia, due to many economic and geopolitical factors, the demand for it has risen sharply in 2022 as well. In addition, the state also supports the demand for gold.

There are several reasons for this support, explains Mark Goykhman. — Demand for gold diverts funds from the consumer market and limits the growth of prices on it. Banks that sell gold receive additional risk-free income. And the Central Bank can use the “non-frozen” part of the gold and foreign exchange reserves to a greater extent by selling gold from them on the domestic market. Therefore, in the current year, tax breaks on VAT and personal income tax on transactions of individuals with precious metals were adopted.

All these factors combine to increase the demand for gold from individuals, even at high prices. The calculation is for a long-term perspective of several years, during which, as expected, gold will rise in price.

– Moreover, the reduction in the price of the metal, which has been observed in recent months, has become a driver not of a decrease in demand, but of its growth. Since it is more profitable to buy an asset when prices decrease, the expert notes.

Since March, when a surge in purchases began to be observed, the price of gold has fallen from 2080 to 1616 dollars per ounce (31.1 grams). Minus 22% for 8 months, 72% per annum – and the cost is becoming more attractive.

The analyst believes that a price increase to $2,000 per ounce is possible, but not as soon as American financial experts suggest.

– On the horizon of several years, with all the fluctuations and falls, there is a chance to rise again to 1900 – 2000 dollars. Since in general there is a long-term trend of increasing the price of the precious metal. But for now, it makes sense to wait until 2023. It is still possible to move back to the $1,600 mark due to the fact that the main central banks of the world, and above all the US Federal Reserve, will continue to raise their interest rates in the coming months to fight inflation. Such actions largely lead to a reduction in the price of gold due to the flow of investor funds into other assets that have become more profitable. After all, gold in itself does not bring interest income, unlike bonds, deposits. The calculation is only for an increase in the cost of the metal itself, – Mark Goykhman is sure.

In his opinion, if gold prices again fall to $1,600 per ounce, it definitely makes sense to invest part of the funds in gold, along with other assets. But it is worth considering the possible risks.

— The risks of such investments exist, as with other instruments. They consist not only in the possibility of reducing the price, the expert says. — There are possible losses on the difference between buying and selling rates, for example, ingots, OMC quotes. For ingots, these are the risks of loss, theft, damage, storage costs. For jewelry – cost reduction due to wearing and so on.

It is most profitable to purchase gold as an investment asset directly on the exchange, through a brokerage account, at the exchange price with a minimum commission.

“This tool is designated GLDRUB_TOM,” explains Mark Goykhman. – It is similar to other exchange instruments – stocks, bonds, currencies – and is offered by brokers for purchase with access through their websites or mobile applications. The purchased asset is reflected in the client’s individual brokerage account. And the purchased metal itself is physically delivered to a special storage facility of the National Clearing Center, which is part of the Moscow Exchange group.

As for jewelry, buying it as an investment is beneficial only when the item itself is of high artistic value. In other cases, gold items can only be considered as decoration, it is unlikely that it will be profitable to sell it later, even if gold prices increase by 20%.

Alena Bodrienko.

A photo With site currency.com