Not only private investors, but also companies are increasingly asking the question of whether, in view of low permanent interest rates, gold could not be an attractive alternative that could also satisfy the need for security.
Currently, however, the gold price is trading at a 5-year low, so that the question initially arises as to whether this is a favorable entry price or rather a substantial weakness. Many people are not aware that the price of gold is extremely dependent on the dollar exchange rate. Many chief analysts and research departments expect an interest rate hike by the US Federal Reserve (FED). This is likely to put further pressure on the gold price. If this interest rate hike fails to materialize for the time being, the gold price will say goodbye to the current low phase. This is compounded by the obvious slowdown in the Chinese economy, which increases fears that the German economy will also be affected. Thus, it can be concluded that gold is by no means a safe and quiet form of investment, but is rather extremely dependent on macroeconomic conditions. As an alternative to traditional investment, gold therefore only serves to a limited extent.
Ideally, significantly higher returns can certainly be generated, but this is hardly calculable and long-lasting periods of weakness are also conceivable. Ultimately, the investor must take into account that he has to assess at least 4 macroeconomic influencing factors in order to be able to make a reliable forecast of the gold price. These include an assessment of Fed policy, developments in major economies such as China, an outlook for global trouble spots (in the sense of gold as a “safe haven”) and, finally, forecasts of securities and bond trends. An admixture is therefore quite sensible, gold is not a real alternative.
Finally, let’s let the investment professionals at Sal. Oppenheim: “An investment is no longer worthwhile in the medium term. The most recent development is reminiscent of 1980, when the price of gold collapsed by around 50 percent within two years. It took almost 20 years for the price to find a positive trend again.”
Which alternatives are worthwhile? We look forward to your comments.
Image source: Fotolia.com, Photographer: SZ-Designs
