Reed Cagle is like many investors in that he's been surprised at gold's strength in recent years and the ways it stayed strong throughout 2022 and 2023. With a potential recession on the rise and a real concern about oil and the length of the Russia-Ukraine war, is gold going to stay stable? A deep look at this topic can help investors better understand their expectations during these trying times.
Charles Reed Cagle Believes in Gold
Reed Cagle knows that gold prices have been retreating in
recent months, which is concerning to long-term investors. For example, the
price dropped to $1,913 on January 17, 2023, after getting up to 1,929 just a
day earlier. However, gold prices have increased by four percent since 2023 and
are likely to increase, thanks to China opening up again and many other factors
that make it a wise investment.
Simply put, gold is typically one of the most consistent and
stable investments, rarely heavily changing. Though prices may go up and down
with time, they don't rocket or plunge out of nowhere. That doesn't mean that
gold is a worthless investment because that stability makes it an excellent
long-term investment option for many people with otherwise unstable or rocky
portfolios.
However, there are a few things that concern Charles Reed
Cagle in the coming months. First, inflation prices are soaring, and interest
rates are getting higher to combat it. That can affect gold prices in various
ways, particularly if the macroeconomic or geopolitical climates worsen. With
COVID-19 still rampaging and the war in Ukraine still a concern, the economy is
not likely to stay strong.
The rule of thumb with gold and inflation is simple:
typically, gold prices increase as inflation rises. That's because investors
flock to gold because of its stability and simplicity compared to global cash
economics. Gold is a safe hedge against inflation and recession, providing
investors with a safe place to put their cash until the recession is over and
the economy once again starts booming.
Depending on how well governments control inflation, gold
prices could start increasing very soon. It's not surprising to Reed Cagle that
they've already gone up by four percent in the first month of 2023. Inflation
continues to spiral out of control, and raising interest rates is a long-term
strategy that only slowly takes control of high costs. As a result, gold is
likely to increase over the next year.
Note that as the U.S. Dollar's value takes a hit, gold will
also increase. It has an inverse relationship with the dollar, meaning that it
increases as the dollar goes down. That may make it a great time to buy into
gold because, with a potential global recession likely to begin in 2023, the
dollar is probably going to go down even further and make gold a smart
investment for the savvy buyer. Once the recovery begins again, you can sell
gold and make a hefty profit that can increase your bottom line.
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