Oliver's Insights - Why is the gold price so strong & can it continue?
This edition looks at the surge in the gold price to a record high.
The key takeouts are:
- The rise in the gold price is being driven by a combination of factors including worries about inflation and the outlook for paper currencies, central bank buying and a fall in the opportunity cost of holding gold. Interestingly while the price of gold is at a record high in nominal terms, in real terms it is still below its 1980 high of $US2,318 an ounce in today's prices.
- While there is a risk of a short term correction in the gold price, more upside is likely over the medium term.
· But given gold’s highly speculative nature a better approach for investors would be to consider a broad commodity exposure, as opposed to a singular focus on gold.
