Why are there "golden" times for gold now?

2020年1月9日

Gold at the start of 2020 provides a lot of opportunities for earning. Jerks at $30-40 per day, which are also accompanied by almost equivalent corrective movements - this is the dream of any market speculator. So now the gold trade provides a real opportunity to "get rich."

We already wrote that buying gold in 2020 can become one of the best and most promising trading ideas.

In today's review, we would like to continue the thought and add a few additional arguments. The times in which we live here and now are quite interesting and unique. Negative interest rates of the Central Banks turn the situation in the economy upside down: you give money in debt, but they return to you a lower total. The yield curve on German government bonds is negative, on deposits in Switzerland - negative, and there are already dozens and hundreds of such examples.

For gold, this opens a new era in existence. After all, what is the main “Achilles heel” of gold as an asset? - the inability to bring guaranteed income, as they do, for example, stocks (in the form of dividends) or bonds (in the form of coupon income). So now, 0% of guaranteed profitability is no longer a disadvantage, but an advantage. At least an advantage over instruments with negative returns.

Moreover, the situation continues to develop in the direction of the growth of gold quotes. This week, real yields on US government debt (10-year treasury bonds) went into the negative zone. By the real rate of return, we mean the actual rate of return adjusted for inflation.

What do we have in total? We have a period of maximum favor for gold when its strengths against the background of geopolitical instability and the threat of a global recession are stronger than ever, and the weaknesses are practically nullified by the prevailing reality.

Finally, we note that one of the main generators of demand for physical gold in the world is China. Moreover, this demand is seasonal with a peak falling on the Chinese New Year, which, as you know, comes on the lunar calendar. In 2020, Chinese New Year will come on January 25th. That is, in the near future, gold is waiting for increased physical demand.

Thus, taking into account all the above and earlier, buying gold in 2020 is an excellent trading idea, the potential of which amounts to tens of percent. Recall that we consider the target of the current upward movement mark $1800.