Gold Investor Archive

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Categories: Supply and demand, Investment

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Director, Investment Research

In this eighth edition of Gold Investor, we take a closer look at gold’s performance and its relevance for investors in the current environment. In particular, we explore:

Gold in a rising dollar environment: Generally, there is an inverse correlation between gold and the dollar. However, our analysis shows that the gold price increases more when the dollar weakens than it falls when the dollar strengthens. In our view, the dollar’s relationship with gold has changed dramatically over the past decades and is likely to shift further as demand moves East and the world moves to a multicurrency system.

In addition, we review:

Interconnections: the factors that drive gold: A useful framework to help investors understand gold’s performance.

The market may be wrong about gold and US interest rates: Many investors believe that a rise in real US interest rates will certainly be bad for gold. Our analysis shows that other factors – some positively correlated to the economic growth that often accompanies rising rates – can have more influence on the gold price. We also highlight gold’s benefits in a portfolio at a time when stocks and bonds may deliver lower-than-average returns in coming years.