Investing in Gold in 2024: Ways and Prospects

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Yellow metal has always attracted investors who appreciate its relative stability and tendency to grow in the long term. Its stability is particularly pronounced in a context of economic and political uncertainty - as in 2024, when the gold price is at an all-time high. This begs the question, why are investors so attracted to gold and other precious metals? Is gold a safe haven in times of crisis? Is it worth investing in gold in 2024? Let's find out.

Investing in gold

Over the past 5 years, the price of gold has risen by over 69%, with 4 peaks above the 2,000 dollars per ounce mark in August 2020, March 2022, May 2023 and December 2023. Gold recently surpassed the May 2023 all-time high for the first time. The all-time high for gold was reached on March 8, 2024 at 2,195 dollars per ounce, and the price reached over 2,370 dollars as early as July 2024.

We saw a bullish year for gold in 2023 due to hopes of key Fed interest rate cuts, but also due to geopolitical issues that impacted the markets in late 2023. Therefore, it was in the final months of 2023 that gold prices began to surge. It seemed that this interest would dry up in early 2024, when the gold price reached an all-time high of over $2,100. However, in March 2024, the gold price experienced one of its biggest jumps yet, rising nearly 8% in just a few days.

While investors are now most concerned about the tense geopolitical situation that could lead to renewed interest in gold, it should be noted that it was concerns about the financial stability of NYCB (New York Community Bancorp) that allowed the price of gold to reach unprecedented levels. In a scenario not unlike the collapse of Lehmann Brothers and the onset of the 2008 crisis, it was high interest rates and NYCB's large exposure to the real estate market that were at the center of concerns in early March 2024, triggering a gold rush.

As for silver, the price of this metal has risen about 66% in 5 years, with a significant increase coming in the spring of 2020 - the price per ounce of silver has risen 154% in just 5 months! As for platinum and palladium, which are mainly used in automotive catalysts, new pollution standards for internal combustion vehicles should increase demand for these two metals. However, we need to keep a close eye on the transformation of the automotive sector towards electric vehicles. Let's take a closer look at the major price trends of precious metals over 5 years and look at the investment outlook.

Gold

The price of gold has increased by 69% in 5 years (from March 2019 to March 2024). From June 2020 to March 2024, gold traded in a trading range of 1,700 dollars to 2,050 dollars. There were two major downtrends during this period: from August 2020 to March 2021, and then from March 2022 to October 2022. From October 2023 and especially in March 2024, after several months of decline, we see the beginning of a clear upward trend, with the price of an ounce of gold finally surpassing the 2,000 dollars mark. While so far every attempt by gold prices to break through the resistance zone above 2,000 dollars has been followed by a period of downward pressure in search of a support zone at the bottom of the trading range, we now see that gold prices seem to have established a foothold above 2,000 dollars.

Until now, 2024 will be remembered as the period when the gold price reached its all-time high. While some analysts are predicting a gold price of 2,500 dollars or even 3,000 dollars, we will have to be very cautious in the coming months as gold traders are now in uncharted waters. Geopolitics and macroeconomics in 2024 will need to be closely monitored to confirm an upside or downside position. Factors such as the use of gold reserves to fund the issuance of a single currency by the BRICS countries will be the catalyst for a return to the uptrend. Wars and geopolitical uncertainty are also factors in favor of rising gold prices, not to mention falling interest rates.

Silver

In 5 years (March 2019 to March 2024), the price of silver has risen 66%. Like gold over the same period, the silver price rose impressively from March to August 2020 (+132%). While gold is finally out of its trading range, the same cannot be said for silver, which has fluctuated between 27 dollars and 20 dollars since April 2020.
During 2023, the silver price did not show a really clear trend, moving again in a trading range. There have been two periods of sharp increases in the silver price, in March 2023 and more recently in November 2023, when the increases were +26% and +14% respectively. At the end of 2023, the silver price declined slightly, by -5%. From the end of February 2024 to today, the silver price (XAG) has returned +14.42% and has gained +10% since January1, 2024. It is important to keep an eye on the same fundamental factors that could push gold higher in 2024, namely a possible drop in interest rates and/or the global geopolitical situation.

Palladium

The situation with palladium is different - in 5 years (March 2019 to March 2024) the palladium price has fallen by 30%. There have been two phases of high volatility in the last 5 years. The first phase began in December 2019 with a +55% surge in the palladium price through February 2020, followed immediately by a sharp drop in the palladium price of over 45% from February through March 2020. The second phase began in December 2021 with a +105% sharp rise in the palladium price followed by a -73% correction from March 2022 through January 2024. As we can see, and as the past has repeatedly shown, palladium is an asset capable of sharp and sudden movements. Moreover, the palladium price has been in a clear downtrend since August 2022.

After peaking above 3,400 dollars per ounce, palladium prices are now in a downtrend. While it is difficult to predict a return to growth after more than two years of falling palladium prices, we should keep a close eye on palladium prices returning to the 1,000 dollars zone. Palladium is mainly used in the automotive industry to make catalysts in exhaust systems that reduce emissions, a sector threatened with decline by the advent of electric vehicles. To a lesser extent, palladium is used in jewelry (white gold), dentistry and watchmaking.

How safe are precious metals investments?

For centuries, gold has been considered an investment during periods of economic instability and market volatility. When stocks fall or currencies depreciate, gold tends to maintain its value or even rise. Gold provides valuable diversification to an investment portfolio. Its low correlation to other assets, such as stocks or bonds, reduces risk and increases the stability of the portfolio as a whole. In addition, gold is a tangible asset and therefore historically retains purchasing power over time. When inflation rises, the value of gold tends to follow that trend. Thus, it provides protection against currency devaluation and helps preserve the value of long-term investments.

Although gold can have quite low liquidity in some instances, especially in cases of low market liquidity or external selling restrictions, gold has a historical tendency to rise in the long run. Compared to other types of investments (e.g. stocks and bonds), gold is a fairly safe investment. In addition, investing in gold is relatively affordable for all types of investors. Whether you want to buy small bars, coins or gold-related financial products, there are options to suit different budgets and preferences, and many banks guarantee the safety of your finances.

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How to invest in precious metals?

• Physical purchase: To buy physical gold, whether coins, bars or bars, there are specialized stores, both physical and digital. These sites offer to buy gold or silver in various forms (1 ounce, 1 gram, 10 grams, etc.).
• Gold in "paper": When it comes to paper gold (gold in the stock market), medium to long-term investors most often use instruments such as certificates or ETCs.
• Stock Market: You can invest in gold or other precious metals by buying shares of the companies that mine them on the stock market. You should favor shares of listed mining companies that are used to making regular profits.

Investing in precious metals may not offer quick returns, but are rightly considered stable. Speaking of gold and silver, these metals have shown a steady upward trend in recent years. Buying gold and other precious metals will help diversify your portfolio, providing it with stable assets even in times of acute economic and geopolitical crises.

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