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Will Gold Be a Good Investment in 2023

There was growth in gold in 2022, so it wasn’t a bad year. However, its value did not rise nearly as much as analysts and investors had hoped. 

Predictions for 2023 are more optimistic, but keep in mind that they are only predictions. 

The big question is whether Gold investment in 2023 is a good idea or not?

Experts believe investment demand will pick up in 2023 as investors are using gold investment as a safe haven amid rising recession fears. In Q322 of 2022, global central banks purchased more than 400 Tonnes of gold, the highest single quarter of demand in recent years. Given the current situation and recessionary fears, the central bank will continue to add gold to its reserves, according to the ICICI direct report. 

“Gold may finally get the recession it needs to shine in 2023. Gold has performed well in five of the seven US recessions since 1973. According to World Gold Council research, yellow metal has been the best performing asset class during periods of stagflation. Stagflation is a plausible scenario for 1H23, though regional variations exist. Gold is expected to perform well in 2023 due to a looming recession, moderately higher inflation, a weakening dollar, and a highly uncertain geopolitical situation,” said Ravindra V. Rao, CMT, EPAT VP-Head Commodity Research, Kotak Securities Ltd. 

A look at the returns of various asset classes over the last three months would lead investors to consider increasing their allocation to precious metals, specifically gold and silver, as prices have risen. 

While gold ETF is up 9.75 percent on average, silver ETF is up 22.55 percent. Over time, Exchange Traded Funds (ETFs) have emerged as popular instruments for investing in precious metals. Though precious metals have performed well recently, investors should not base their decisions solely on these figures. 

Why should consider gold investment in 2023?

If you’re thinking about investing in gold in the new year, consider the following advantages. 

It’s an excellent inflation hedge. 

Gold and other precious metals have long been thought to be a wise way to combat inflation. This is because, despite fluctuations in the dollar, it tends to hold its value — and thus your purchasing power — over time.

It can diversify your portfolio 

When an economy enters a recession, which Goldman Sachs predicts will happen 35% of the time next year, the stock market follows suit. During a recession, real estate investments can also lose value. 

During these times, gold can be an excellent way to diversify your portfolio, reduce your exposure to riskier assets, and mitigate the impact of any losses. 

It’s more liquid

In a recession, liquidity — or the ability to quickly sell assets for cash — is critical. Then, if you run into financial difficulties, you can sell those assets and still pay your bills and other necessities. 

Stocks, bonds, real estate, collectibles, and other tangible assets are all illiquid investments. They’re difficult to convert into usable funds, especially when demand for those items is low (who wants to buy rare artwork when they can’t pay their bills?). 

Gold, on the other hand, is highly liquid and can be exchanged for cash quickly, making it an excellent investment during recessions.

Conclusion

Good for some, not for others 

To be clear, gold is a good investment for some people, but it is not for everyone. If you want to maximize the growth of your investments, for example, gold is probably not for you. Gold is typically regarded as a low-risk, safe-haven investment that does not provide high returns. 

If you’re unsure whether gold is the right investment for your finances — or if you need assistance making a gold purchase — consult with an investment advisor or financial planner. They can assist you in making the best decision for your objectives and risk tolerance. 

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