Four Reasons Why Gold Could Rise in the Coming Period

Croatians spent around €350 million on investment gold last year, and this year that amount could reach as much as half a billion euros, it was estimated this week at the international conference CroGold. This is further supported by the fact that last year at this time we were discussing and writing about how the price of gold was at a peak of $2,500. This week, the price of the metal peaked at $3,130 per ounce. Therefore, the director of the Gold Center, Saša Ivanović, stated that we are far from the end of the rise in gold prices, which he estimated could reach as high as $7,000 per ounce by 2030.

– This year is exciting for all of us involved in gold. The price has risen by 37 percent in a year, and we have just experienced the best quarter in the last 29 years. Investment gold has entered the mainstream, and more and more investors see its advantages – said Ivanović, adding that savers are directing their money into safe investments during these uncertain times, with gold being the main one, of course.

– The world is at a turning point; new crises are raising numerous questions, but one thing is certain: gold remains a guarantor of security and stability in uncertain times – concluded Ivanović.

For this reason, its price will continue to rise, and the exact main reasons for its increase were highlighted in his presentation at this conference by the CEO of the Argor Heraeus precious metals refineries and mints, Jörg Endres.

—

Jörg Endres.

photo

—

As the first reason, Endres cited the demand from central banks, which continuously buy gold to diversify their portfolios and create a stable system, and this trend will only continue in the coming period. Gold, he claims, has historically had an exceptionally good performance, so it is not surprising that it is stored for crisis times in central banks.

The second reason for the future rise in the price of this metal is the expectation of a depreciation of the dollar. This is already evident as the value of the dollar against a basket of currencies has fallen to its lowest level in six months. The dollar index, which shows the value of the US dollar against the other six major world currencies, was around 101.70 points this morning, while it was 103.13 points at the same time yesterday. Meanwhile, the exchange rate of the dollar against the Japanese currency plummeted from yesterday’s 147.25 to 145.90 yen. The American currency has also weakened against the European currency, with the price of the euro reaching $1.1060, while it was $1.0915 at the same time yesterday.

– There is a clear sign that Trump wants to weaken the US dollar, and if the US dollar weakens, gold will certainly rise – said Endres.

As the third reason for the rise in the price of gold, Endres mentioned the fact that gold is a limited resource, so the fundamentals of supply and demand will be reflected here, while at the same time there is a chance for geopolitical tensions in gold-exporting countries, which could also increase the price of the metal.

Finally, as the fourth reason why gold could rise, according to Endres, is Generation Z, or the fact that the youngest generations see gold as a safe haven for their first investments, primarily for three reasons: because it is safe during inflation, because it is tangible (compared to cryptocurrencies, which this expert believes are no longer attractive), and because they see it as a suitable gift for others.

Of course, Endres was speaking for the German market, but he believes that trends will spill over to the rest of the EU. If we look at Croatia, as Ivanović mentioned, we see an increase, but sales have not yet reached levels comparable to the rest of the EU and other developed countries in the world. Ivanović noted that this is because gold only became a profitable investment after Croatia joined the EU when VAT and luxury taxes were lifted.

However, things are slowly moving towards the desired levels, with sales in the first quarter of this year growing by about 70 percent, while globally it was around 50 percent.

—

Saša Ivanović

photo

—

– Croatia always grows a bit more because it is quite a ‘young’ market, and people are just getting used to buying investment gold and saving in it – said Ivanović, who also noted that Croatians mostly consider gold purchases as a long-term investment through which they want to preserve the value of their money, while they are less motivated by profit. The advantage of gold is also its liquidity, meaning it can practically be sold the same day to obtain cash.

In conclusion, Ivanović compared investing in gold to investing in government securities, stating that if citizens invested €6 billion in gold, they would earn about €2 billion, while in the case of government bonds and treasury bills, that amount would be around €200 million.