HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

All that glitters ain't gold


Amid all the commotion in the equities and cryptocurrency markets, the yellow metal has looked somewhat neglected of late. At the height of the coronavirus crisis, gold was the asset everyone wanted for its reputation as a store of value and inflation protector. But between the vaccine roll-out, higher US Treasury yields and central bank intervention, the quintessential safe haven has since fallen out of favour. Gold is now down almost 15% from its August 2020 highs, and many are worried that this could be just the beginning. But what if they’re wrong?

Digital gold vs the real McCoy

The eyes of much of the world have been fixed on the cryptocurrency space this past year… and with good reason. Bitcoin is up almost 1000% over the last 12 months, and Ethereum even more so. As such, the long-espoused opinion that these big-name digital currencies could be shaping up to replace gold as the go-to hedge is gaining some serious traction.

While nobody knows what the future holds, it’s hard to see how this can happen while crypto remains so inherently volatile. An asset class with such a high alpha is certainly an attractive investment prospect for the risk-on investor but perhaps not the safest bet for storing value long-term.

Once the hype surrounding digital assets subsides a little, one can’t help but think that both retail and institutional investors will look at the gold price and decide to increase their allocation in the commodity with thousands of years of experience under its belt.

Yield of dreams

One of the biggest shocks in recent weeks has been the sharp rise in government bond yields. For instance, 10-year Treasury notes are up almost 50% YTD, while their 30-year counterparts have risen by nearly 40% over the same period. Analysts have largely attributed this to increased optimism surrounding global vaccination efforts and the gradual opening of economies, which has, in turn, sent gold into a tailspin. But with central bank interest rates so low (and likely to remain so for the foreseeable future), such movement in an otherwise mostly stable instrument can’t be explained away by mere positive sentiment.

There’s a convincing view, albeit among a minority, that the T-bill yield spike is, in fact, a precursor of significant inflation on the horizon. While gold does, indeed, tend to exhibit an inverse correlation with government bond yields, its positive correlation with inflation is far more robust and historically better documented. In this light, it could be just the right time to take those handsome crypto profits and park them in gold — especially since the yellow metal is so attractively priced.

Cycle of life

As you’re probably aware, commodities aren’t at all like stocks. They don’t rise 400% in a month and then drop 50% over the next. This is because they have a real intrinsic value, and the businesses that use them in their products rely on a certain level of price stability.  Nevertheless, they do go through cycles of elevated and depressed values. The general consensus among experts is that we are at the dawn of a commodities ‘super-cycle’ that will be driven by the global economic recovery, massive government spending and green energy policies. Indeed, JP Morgan wrote in their latest report that “a long-term boom across the commodities complex appears underway, and there could be big gains ahead for the entire sector”.

We are already seeing this prophecy come to fruition in other precious metals. Platinum, for instance, has rocketed nearly 100% in the past 12 months, while Palladium is up around 70% over the same period. With all other factors as they are, it looks like it’s only a matter of time before gold catches up to the pack.

Trade gold with Libertex

It’s normal to be concerned by the big swings in commodities, but don’t forget that, as a trader, volatility is your best friend. At the end of the day, it doesn’t really matter which way the market is moving as long as it is moving. With Libertex, you’ll always find a lucrative opportunity wherever you think Gold prices are headed. Since we offer both long and short positions on the yellow metal, you’re bound to find something to tickle your fancy. And if you want to maximise your potential gains, you can always take advantage of our generous leverage facility. Get online and register your very own Libertex account now. There are no lengthy verification procedures, and sign up only takes two ticks. Before you know it, you’ll be trading Gold with one of the most trusted brokers in the business!

#source


RELATED

Embarking on ETF Trading: A Beginner's Guide

Entering the world of Exchange Traded Funds (ETFs) trading might appear daunting to newcomers, but it's a surprisingly accessible endeavor, thanks to the abundance of online resources and tools available today...

ETF vs Index Fund: Similarities and Differences

Wondering what is the difference between ETFs and index funds? This article explains that and more, including what to look out for when choosing between them. Index funds and ETFs...

Everything You Need to Know About Margin Trading

Margin trading is a popular method used by traders all over the world. It can offer attractive opportunities, but as with any form of trading there are no guarantees and the level of risk must be taken...

What is a Fan Token?

With the invention of social networking sites such as Facebook, Instagram, and YouTube, you can now engage and connect with famous people continuously. The cryptocurrency industry...

Know Your Heroes: Successful Traders of Modern Era

We bet you've heard many times that a great journey starts with a small step. What if we say that success is just a journey, not a final destination. But where you have to...

What do alpha and beta mean in investing?

Alpha and beta are indicators for evaluating the effectiveness of investments. Alpha measures the performance of an asset or a portfolio relative to the market...

Ten Reasons You Should Learn To Read Price Action

As Charles Dow stated, the price is an excellent market data storage. It is the price that contains all the necessary information, and its movements demonstrate...

How to Get Started Day Trading Guide

Day trading is as simple as it sounds and can truly be anything you ultimately want it to be. Like anything, practice makes perfect and you get back out...

How To Become A Successful Trader In 2023

In today's world, trading has become an attractive career choice for many individuals looking for financial independence and flexibility. However, becoming a successful trader requires more than just basic knowledge...

Guide To Choosing A Broker In 2023

Choosing a reliable broker is an important step in the career of a successful trader. It is the broker, being the intermediary between you and the market...

What Are Commodities and How to Trade Them?

Since the beginning of human civilization, commodities have been a vital investment asset. In short, a commodity is a basic good or raw material that people buy and sell...

Octa broker: leveraging AI to revolutionise trading and investments

AI has already made a profound impact on the financial markets. Its ability to predict trends, execute trades swiftly, and manage risk is transforming investment strategies at its core.

What is Risk Management in Forex?

A trade may be closed profitably or at a loss. Trading, as a whole, may become profitable or lead to losses. Risk management in Forex is about reducing the loss factors.

Exploring the Trustworthiness of Forex Trading: What You Need to Know

Forex trading is indeed a legitimate and trustworthy way to engage in financial markets and potentially reap profits. However, it exists within a complex industry where both rewards and risks can be exceedingly high...

Altcoins, Bitcoin, DeFi, NFTs: Various Types of Cryptocurrency Explained

According to the current running total on cryptocurrency price aggregator CoinMarketCap, there's over 9,000 types of cryptocurrency in the crypto market today...

The Importance of Analysis in the Forex Market

Forex market analysis comes in two distinct forms; technical and fundamental analysis. Discussions have raged since the birth of trading as to which analysis is best, or whether...

What is a Good Profit Margin in Trading?

Profit margin measures the earnings relative to the revenue. The three main margin metrics are gross profit margin, operating profit margin, and net profit margin...

Cable or Loonie? The ultimate guide to currency nicknames

What are these pro-traders talking about? Who or what are Matie and Guppy? Are they distant relatives or secret code words to enter a sorority?

What Is Bitcoin and How Does It Work?

You must have heard about it. The first and most famous cryptocurrency has been in the headlines due to a vertiginous increase in value, breaking the threshold of $1,000 for the first time on 1 January 2017...

Understanding the Piercing Candlestick Pattern in Trading: Benefits and Limitations

The vast world of trading is replete with countless patterns and technical indicators, each promising its own set of advantages. Among these, the piercing candlestick pattern stands...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.