![]() ![]() part of that (rise) is definitely coming from industrial metals which have really been on a tear. "Industrial demand is probably the main reason why we've seen silver outperform gold, as it has over the last year. Still, its uses in industry was one of the main reasons driving its recent rise in value, he said. The association's data show there has been more demand than supply of the semi-precious metal so far in 2021.īut Ole Hanson, head of Commodity Strategy at Saxo Bank, told CNBC that although around 50% of the demand for silver was industrial, the rest came from investors. Its high electrical conductivity and durability gives it industrial and technological applications, with almost every computer, mobile phone, automobile and appliance containing silver, according to the Silver Institute. "It does something to a portfolio - it balances it properly, especially when you have a down-moving stock, you're happy you have that gold position.From electronics to photography, jewelry and coins, silver is integral to numerous everyday products. "We allocate 7.5% in gold," says Palumbo. Many financial experts recommend holding no more than 5% or 10% of your portfolio in gold. Holding a slice of gold can help to diversify your portfolio and offset riskier investments. However, gold's long-term stability is its greatest value to investors, particularly in a volatile economic environment. Whether gold's value soars in 2023, as some analysts predict, remains to be seen. Historically, gold's value tends to rise when inflation decreases the value of the currency, though this isn't always the case. ![]() "I think the dollar continues to weaken in 2023 on the back of maybe the economy actually strengthening a bit and interest rates stabilizing, so in that type of situation, gold could actually do well."įurthermore, the threat of a recession may bode well for the price of gold. "The trend for gold is definitely going to be upward, which is really going to be dependant on how the dollar performs," says Palumbo. As Palumbo points out, interest rates and the dollar's strength will play a prominent role in the prospect for gold this year. No one knows for certain where gold's value may wind up this year, but many financial experts are bullish on the commodity's outlook. Consequently, this period is when gold prices began to rally upward. ![]() Dollar Index data, this trend continued until November 2022, after which the dollar weakened marginally through January 2023. But despite high inflation, the dollar strengthened in relation to other currencies for a large portion of 2022. ![]() Gold is often seen as a hedge against inflation and a storage of value. So if the dollar really appreciates during an inflationary period, gold will not perform well, but historically gold really has been a good hedge during inflationary periods." "Gold really didn't perform as well, and that was really a function of the dollar. "When you have a situation where you have interest rates that went up, and the dollar strengthened, that's where gold can actually get hurt," says Philip Palumbo, CEO and chief investment officer of Palumbo Wealth Management. A historically aggressive interest rate hike schedule, along with a strong dollar, influenced the decline in the precious metal's value. However, the next several months were not so bullish, as the precious metal fell over 20% in value by September 2022. Remember, gold prices approached record levels of over $2,000 per ounce in February 2022 at the onset of the Russia-Ukraine conflict. While the drop is relatively minimal, there's more than meets the eye. Gold's value dropped 2.88% year-over-year from mid-February 2022. Where gold's current value ranks historically ![]()
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