Investing in gold is investing in the most trusted currency for thousands of years. Gold is an asset that always increases in value in times of crisis : it reassures investors who know how well the golden metal is able to store value over time. Should the coming recession (which has already started) make you think twice about investing in gold? Is investing in gold in 2024 a good idea? Follow the guide to understand everything about the most famous metal!
What is the price of gold in 2024?
After a stable year in 2021, the price of gold rose sharply at the beginning of 2023 : from $1800 at the beginning of January to over $2000 in March.
And for what reason? This is not due to chance, 2 reasons explain this rise in price.
Inflation : the current inflation rate is not insignificant. It has reached its highest level in 40 years in the US and 13 years in Europe. In June 2023, it will reach 9.1% over one year (US) and 8.6% in Europe.
Inflation means an increase in the price of goods and services, gold was no exception and its value increased.
Gold also benefits from what is known as the Cantillon effect. The Cantillon effect explains that not everyone is equal when it comes to the monetary policies of countries : the assets favoured by the wealthiest people are favoured when money printing takes place.
The war in Eastern Europe : On Thursday, February 24, 2023, the first military campaign of the conflict began. This event triggered major movements in the equity markets and many assets with the wind in their sails collapsed… in favour of gold.
This pattern is regularly observed on the markets when there is fear, uncertainty and doubt (FUD) and it is safe haven assets such as gold and the dollar that benefit in the long run.
The war itself is a catalyst for inflation, especially in Europe. Indeed, the countries of Eastern Europe, until now very large producers of grain in the world, have seen their activities slow down considerably.
Will gold continue to rise?
The answer is yes. In 2024, we will still be in an economic recession until the end of the year. Gold will be an asset that will continue to rise in value.
To understand how gold is rising and why it may continue to rise in the coming years, we need to identify the factors behind its growth.
We have already mentioned inflation, but it is not the only factor that affects the price of the precious metal.
So what makes gold go up? Along with inflation, we can cite money printing and the purchase of gold by central banks.
Money printing and gold
“Inflation is always and everywhere a monetary phenomenon” – Milton Friedman
What does this mean?
In concrete terms, what Milton Friedman explains to us is that inflation is only a consequence of money printing : it can only be generated by an increase in the quantity of money in circulation that is faster than the production of goods and services.
And in fact? The high inflation we are experiencing in 2024 was triggered by the anti-crisis measures of 2020, represented by the financial aid of Western governments.
These aids were made possible by massive money printing.
For the year 2021 we are talking about 2000 billion dollars printed in the USA, the famous helicopter money.
Gold purchases by central banks
Central banks again!
In 2021, the world’s central banks purchased a total of 463 tonnes of gold, an increase of 82% compared to 2020 (source : World Gold Council).
Central banks are obviously fond of gold bars and coins for the same reason as anyone else: gold is an incredibly resilient store of value in the face of economic shocks.
The massive purchase of several tons of gold by central banks is a key indicator: as with any market and/or asset, if a currency-issuing authority itself periodically turns to a particular asset or investment, chances are a significant portion of investors will follow suit. Gold is no exception, quite the contrary.
Gold price forecast 2024
This is a perilous exercise as predicting the price of an asset is like predicting the future and the events linked to it.
Because it is a safe-haven asset, gold benefits from the decline in the stock market (stock market) and bonds.
So we have a first clue : if a downward trend in the stock and bond markets takes hold, then the price of gold will rise in 2024.
So what is the gold price forecast for 2024?
The very famous investment bank Goldman Sachs has raised its forecast for the end of 2034 and projects gold at $2500 per ounce (compared to $1780 on August 1, 2022).
This estimate is supported by the same criteria we mentioned earlier : market uncertainty, economic recession, and tensions in Eastern Europe.
Should you buy gold in 2024?
There are mainly 2 reasons why we advise you to buy gold in 2024 : inflation and the notion of a trusted currency.
So if you have to answer this question very quickly : yes, you should buy.
Inflation again and again
If inflation is one of the reasons for gold’s spectacular rise in recent years, it proves just how resilient it is to the rising prices that eat away at your daily purchasing power.
With the general increase in the price of goods and services, gold allows you to store value over time without the risk of collapse.
In fact, gold benefits from a double phenomenon thanks to inflation : its value increases like any other asset; this is the primary phenomenon of inflation; but it also pushes investors to secure every investment and to turn to a resilient asset : gold.
So inflation increases the price of gold a first time and then a second time by a simple psychological mechanism provoked in the crowds : “since prices are rising, I’m losing purchasing power, so I’ll turn to an asset that absorbs this inflation and buy gold”.
We don’t need to draw you a picture of 2024 and the years to come : inflation is not over, nor is the economic recession, so protecting yourself against a probable loss of purchasing power by buying gold is a strategy to consider.
Gold, the only trusted currency
We’re getting into more specific details that would belong in a course on money (and trade between humans since the beginning of trade history), but this concept is important to understand if you want to understand why gold is the asset that goes up in times of crisis.
Do not underestimate the importance of investment knowledge. You need to understand the underlying mechanisms of each asset. Understanding allows you to invest your money without making mistakes.
The central bank currencies we use today (the euro for the ECB, the dollar for the FED) are just overlays of the real currencies used in the past. The main currency on which these overlayers are based, as you can see, is gold.
For 5,000 years trade was conducted using various currencies that were easier to store and transport, but basically the most valuable metal resource when it came to trade was gold.
All the state’s fiduciary currencies are largely indexed to gold, and until 1971 in the USA it was possible to exchange your dollars for gold : this was called the famous gold standard.
The problem is that over the decades, these FIAT currencies (your everyday money : dollars, euros, yen… etc.) devalue against gold, erode, and the value of these paper currencies tends inexorably towards what they are really worth as paper : zero.
What does this graph tell us? Your one dollar in 1900 (which probably bought you several dozen baguettes) is now worth only $0.03, or 3 cents in 2023.
The opposite example is more telling : with 1 dollar in 1900 you had the same purchasing power as with 35 dollars today.
With 100 dollars in 1900 : 3500 dollars today.
With 10,000 dollars in 1900 : 350,000 dollars today.
Unlike gold, state currencies are unable to store value. As inflation, crisis and massive currency printing measures will not stop, our state currencies will continue to see their values plummet.
A very clear book about the functioning of gold, securities and state currencies throughout history : “Layered money” by Nik Bhatia, if you are interested in these subjects we highly recommend this reading.
How to buy gold in 2024?
Buying gold in 2024 is relatively simple : you can go through an online broker, or directly make your purchase from a specialized seller.
The gold you buy can take many forms : it can be physical gold or paper gold.
Before buying gold, you should answer these 2 questions :
- Where do you want to buy it? From whom?
- How would you like to buy it? What shape?
Where to buy gold?
Going through an online broker is the most common way for investors to obtain the famous yellow metal.
The most famous online brokers are :
- Buy gold and silver .fr
- Bourse Direct
- Gold Avenue
What type of gold should I buy?
It is entirely possible to buy gold in a physical store. Buying physical gold is the first and most obvious answer.
Buying physical gold means acquiring gold in tangible form : jewellery, coins, bars.
The advantage lies in the material side of the asset, as you can see, it is tangible and moreover very beautiful : who has never been in admiration in front of a beautiful gold coin and for the luckiest in front of a gold ingot?
Disadvantages of physical gold :
- Storage; it is not easy or cheap to store gold coins or bars in a secure vault.
- Liquidity; buying and holding gold bullion takes time and requires several authentication processes. Even worse for the sale : to be able to part with your gold coin will take several weeks to validate all the necessary actions.
For investors in a hurry looking for a better liquidity than that offered by gold coins and bars : investing in paper gold is for you!
What does paper gold mean?
Quite simply, you are not in possession of a tangible asset but an investment product that replicates the market price of gold.
Paper gold usually takes the form of an ETF (Exchange Traded Fund), a certificate or a CFD. It is possible to invest in these ETFs and products in the same way as you would buy a share on the stock exchange.
In another style, it is possible to invest in gold in a “derivative” way by buying shares of gold companies (companies operating gold mines).
If you only invest in the European stock markets, you will have to open another type of envelope, such as a CTO.
Like tangible investment, paper gold does not have only advantages :
- Risk related to the reliability of the issuer : the certificate issued needs to be backed by physical gold in storage.
- Management fees, exchange fees
What about taxation? Your gold in the form of ingots, coins, ETF or share will not be subjected to the same taxation in UK and in Europe : VAT and other taxes vary according to the nature of your investment.
Gold price forecast for the next few years : what does the future hold?
The advertised prices are the dollar amount to buy an ounce of gold.
These estimates are based on the research of the In Gold We Trust Report, the annual report on gold trends.
We are entering into estimates here by imagining positive or negative scenarios for gold based on the current economic context. This does not reflect the future price of gold.
Gold price forecast 2024
The price of gold in 2024 : $2200 per ounce.
Gold is the safe haven asset of choice. Safe-haven assets are on the rise when the economy is sick.
It is hard to imagine a more favourable macroeconomic context between now and 2023. It is therefore tempting to assume that gold will continue to rise quietly to reach $2200 at the end of the year.
Gold price forecast 2025
The price of gold in 2025 : $2500 per ounce.
The In Gold We Trust report predicts that inflation will be fairly contained until 2025. Although inflation will continue to rise, it will still cause the price of gold to take off completely.
Gold price forecast 2030
The price of gold in 2030 : $4800 per ounce.
The end of the decade will be marked by an acceleration of the rise in prices, shaking the equity markets and safe havens, causing many investors to retreat to the benchmark safe haven asset : gold.
Factors to watch for when anticipating the price of gold
In addition to state and central bank purchasing policies, potential future economic crises and inflation, two other factors should be considered : international relations (especially China & US) and… Bitcoin.
China & USA : tense international relations
International relations could have been placed in the same category of factors as “economic crises” because this is typically what they cause when they are in their infancy.
However, China-US relations have reached such a point that a potential armed conflict between these two countries would have catastrophic consequences for all markets, including gold.
A war, economic or military, between these two countries would plunge a good part of the world into a deep crisis and would inevitably push most investors to panic and they would sell a good part of their assets to refocus on a safe asset : gold.
Bitcoin to dethrone gold?
What does Bitcoin have to do with gold? There’s plenty!
Bitcoin is gold 2.0 : rare, difficult to produce.
With slight differences to Bitcoin’s advantage : incredibly liquid, easy to store, and anyone can own even a fraction of it.
Could Bitcoin be gold at its best?
The general public does not yet fully understand this mathematical object that is Bitcoin, but the evolution of its adoption and understanding around the world will be a decisive factor for the value of gold : if investors grasp its value and superiority as a trusted asset vis-à-vis gold, then the famous precious metal may be in for a bad day.
Why is that? Because in a functioning economy : winner takes all!
Very rarely have two trusted currencies coexisted. Silver is a good example : appreciated and used for a long time as a currency of exchange, it was never able to compete with gold
The macro-economic context in 2024 is more than favorable to a rise in the price of gold in the coming years : inflation, monetary policy of central banks and increasing international conflicts will not reassure investors who wish to secure part of their investments in the precious metal. If you also want to protect your assets, then you can already start investing in gold in 2024!
Passionate about savings and investment topics. I modestly try to offer you simple, sometimes not so simple, solutions to beat inflation.