Bullion Bulletin: What price 2023?

In the countdown to 2023 analysts have fingered their abacuses and come up with price forecasts for gold next year. Capturing more media attention than most has been the Danish investment bank Saxo’s “outrageous” set of predictions, including that spot gold “rises above” $3,000 an ounce. But given that another of Saxo’s predictions is that French President Emmanuel Macron decides to resign and retire from politics in early 2023 that $3,000/ounce looks remote.

Mind you, Saxo is not the only extreme forecast. Zoltan Pozsar, investment strategist at Credit Suisse bank has said it is “not improbable” that gold could reach $3,600 an ounce if Russia responds to the G7’s $60/barrel price cap on Russian crude oil by accepting payments in gold. This too seems a remote possibility – but analysts thrive on media attention, Pozsar got lots with this conjecture.

As for this year, few could have predicted or imagined one of the most dramatic events, Russia’s invasion of Ukraine. The gold price has seen a remarkable price range this year (peaking at almost $2,044/ounce on 7 March, falling to $1,627.84 on 25 September and now trading at $1,788 on 13 December) and few forecasts at the end of last year captured that range.

But given the dramatic events of the past 12 months – inflation in the US and UK the highest in more than four decades, the tremendous spike in energy prices, a belated catch-up by many central banks that had previously swallowed the ‘inflation-is-transitory’ line, record gold-buying by central banks – that’s perhaps not surprising.

Glint cannot and does not give investment advice and it does not make gold price predictions – a relief, given the high chance of getting it wrong. But if we look at what has happened this past year, it’s safe to say that gold has served one important purpose – it has kept its head while all about it seem to have been losing theirs. In US Dollar terms, by the start of December it was down 3.3% according to Incrementum, the asset manager, but in other major currencies was up, by 8.5% in Pounds Sterling and 16% in Japanese Yen. The S&P 500 meanwhile has lost almost 15% in 2022; the Dow Jones Industrial Average is down by almost 5% this year. The purchasing power of major fiat currencies such as the Dollar or the Pound have been significantly eroded by this year’s inflation. Gold is often referred to as a ‘defensive’ asset, i.e. one with lower volatility, more stability. The cryptocurrency market this year has experienced a huge crash, with the most popular, Bitcoin, losing about 70%.

No-one can know what the New Year will bring. The shiniest thing you can buy this holiday season may not be tinsel for your tree – for Gold is security and Glint its key. At Glint, we make every effort to demonstrate a balanced conversation between gold, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.