Gold price: lower, always lower?

Has Gold Lost Its Safe Haven Status? In view of the developments of the past few weeks, one can certainly ask this question. While gold was still trying to break out above $2,000 on Easter Monday, it then went down around $150. The precious metal was not alone in this. Stocks, cryptocurrencies, industrial metals, even the bonds – everything was trending south.

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Shouldn’t gold gain when other assets sell off like this? The problem is that the announcement by the US Federal Reserve that it intends to raise interest rates aggressively has led to a flight reaction among investors. When investors flee, they do so primarily into one asset: the US dollar. So it shouldn’t come as a surprise that the dollar is outperforming all other assets in the short term.

Fear of interest rates as a stress factor

Back to gold. If you compare gold with other investments such as cryptocurrencies, stocks or even its little brother silver, you quickly see that it has actually held up much better. However, the environment has not allowed for any real winners apart from the US dollar. From a fundamental point of view, the inflation figures from the USA are now becoming important. Normally, gold should benefit from high inflation. But with the US Federal Reserve making inflation control its top priority, gold investors can even hope that the inflation data will be slightly weaker. This could dampen interest rate fears that are currently keeping the markets in suspense. This in turn should lead to the US dollar weakening and money flowing back into other investments such as stocks or precious metals.

And of course also again in precious metal stocks. The papers, which were already rated favorably, have been passed down again in the past few days. Dividend yields of 3.7 percent at Barrick Gold (WKN 870 450)the second largest gold producer in the world, or 3.2 percent at Newmont (853 823)the #1 gold market player, are historically unique opportunities.

Not every price decline is automatically an anti-cyclical buying opportunity. But in view of the high and comparatively safe dividend yields of Barrick Gold or Newmont, investors have an opportunity here with the two stocks.

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