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Bullion Box: Gold to $4,000 in 2023?

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Gold to $4,000 in 2023?

In an uncertain climate, where interest rate hikes and recession fears spark volatility across markets, gold stands as a secure hedge against uncertainty. Juerg Kiener, managing director and chief investment officer of Swiss Asia Capital, recently estimated that prices for gold may surge to $4,000 per ounce by the year 2023. As central banks inject liquidity into financial markets, investors are increasingly turning to gold for its safe-haven appeal.

The price of the precious metal could reach between $2,500 and $4,000 sometime next year, Kiener told CNBC’s “Street Signs Asia” on Wednesday.

There is a good chance the gold market sees a major move, he said, adding “it’s not going to be just 10% or 20%,” but a move that will “really make new highs.”

There is a consensus among economists that the first quarter of this year may bring some economic challenges, and John Kiener, chief investment strategist at McGowain Private Wealth Management, recently confirmed this worsening outlook. Kiener believes this could lead many central banks to slow their pace of interest rate hikes, which would make gold instantly more attractive as an asset. Among its many properties, what sets gold apart is that it’s the only asset which every central bank owns. This means that when all other investments and currencies fluctuate, gold remains seen as reliable in terms of stability. With these indicators in view, it is no surprise that investors are shifting their focus to gold for the foreseeable future.

According to the World Gold Council, central banks bought 400 tonnes of gold in the third quarter, almost doubling the previous record of 241 tonnes during the same period in 2018.

“Since [the] 2000s, the average return [on] gold in any currency is somewhere between 8% and 10% a year. You haven’t achieved that in the bond market. You have not achieved that in the equity market.”

Kiener also said investors would look to gold with inflation remaining high in many parts of the world. “Gold is a very good inflation hedge, a great catch during stagflation and a great add to a portfolio.”

Gold rallied on Tuesday as the U.S. dollar weakened after Japan’s central bank adjusted its yield curve control policy. The announcement caused gold prices to rise 1% above the key $1,800 level, before dipping lower Wednesday as the dollar recovered ground.

Advice for Investors

Nikhil Kamath, co-founder of India’s largest brokerage Zerodha, said investors should allocate 10% to 20% of their portfolio to gold, adding that it’s a “relevant strategy” going into 2023.

“Gold also traditionally has been inversely proportional to inflation, and it has been a good hedge against inflation,” Kamath told CNBC on Wednesday.

“If you look at how much gold you require to buy a mean home in the 70s, you probably require the same or lesser amount of gold today than you did back in the 70s, or the 80s, or the 90s,” he added.

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