According to an analyst from the largest investment bank Goldman Sachs, gold may fluctuate slightly in the short term. This is related to the tendency of investors to look for new investment opportunities, and therefore, they sometimes run away from the established gold. But from a long-term perspective, they will always find out that they will hardly ever find the security that gold represents.

Why to invest in gold and live a safe and happy life? 

 

1. January Inflation is a scarecrow. Gold is like a talisman

Goldman Sachs takes inflation as one of the main topics of the current economy. The depreciation of currencies has a great impact on the comfort of our lives, and it is therefore necessary to defend against the unpleasant phenomenon. At this moment, gold may help the same way as it helped in the past crisis.

“Inflation concerns will push the price of gold upwards, as in the Great Depression (2008–2011). Thus, the value will grow until the economy recovers and prospers again,” says Goldman Sachs, whose team forecasts an inflation rate of more than 3% for the next year.

The main reason includes fiscal expenditures in connection with the economic defence against the consequences of the COVID-19 pandemic. “This will lead to fears of long-term inflation and the demand for gold will thus increase significantly,” explains the company.

 

2. The dollar is weakening 

The US currency is falling steadily and Goldman predicts that the following year would also be marked by a decline. The dollar and gold are very strongly linked assets, and when one of them is falling, the other one is prospering. 

“A major breakthrough is coming, when gold will not fall due to a strong dollar. The correlation between the strengthening of the dollar and the fall in the price of gold is slowly disappearing. This prepares the ground for the rise in the price of gold in 2021.

 

3. Emerging markets are increasing their retail demand 

“Emerging markets are crucial for gold. And the demand for precious metal in those markets is growing. People desire for the wealth that gold brings,” says Goldman Sachs. He also adds that demand from China and India is currently normalizing.

According to the company, the fact that Joe Biden will most likely sit in US President's chair also supports the price of gold. This means that the risk of high sanctions and tariffs imposed by Donald Trump on various foreign markets is significantly reduced. Gold will thus become more available throughout the world.

So what will be the price of gold?

The company predicts that gold will reach the value of USD 2,300 per troy ounce already in the next year. This means that one Lady Fortuna ingot, weighing just one troy ounce, will be worth more than EUR 2,400.

So if you invest in gold this year, you will soon earn more than 22% on your investment.