Eurpean companies are more pessimistic about the future: this is shown by the ifo business climate index of July 2019. In times of uncertainty, investors and investors are always looking for alternatives for their portfolio. Political imponderables such as trade disputes or the Brexit further unsettle the markets. Our investment experts provide information on whether it makes sense to add precious metals to the portfolio at the moment - and why.
In the past, when nervousness was heightened, investors often fled to precious metals such as silver and gold, along with other investments. This is also reflected in the price: the silver price has risen by more than 15% since the end of May 2019 from 14.25 US dollars to currently just under 16.50 US dollars per troy ounce. The gold price also increased by over 13% to just under 1,450 US dollars per troy ounce during this period. Not least because of the strong price increase, more and more investors are now paying attention to the two precious metals again.
What does the chart technique tell us?
From a chart-technical perspective, the recent upward breakout in the gold price above 1,350 U.S. dollars is fundamentally positive. From a medium-term technical perspective, the price target range is between 1,500 and 1,550 U.S. dollars per troy ounce. However, despite the positive scenario, setbacks to the breakout level are possible at any time. Only if the price falls below the level of 1,350 U.S. dollars on a sustained basis should the positive scenario be shelved, at least for the time being. A return to the sideways movement is likely. The chart picture in https://exnesscom.com/cryptocurrencies-trading/ for silver has also brightened up again after a long lull. A floor was formed at around 14 US dollars per troy ounce and serves as support. The breakout above 16 U.S. dollars improves the chart picture significantly and within the next 12 months prices between 19 and 20 U.S. dollars per troy ounce are possible.
Is the addition of precious metals really a good alternative in uncertain times?
At least in the last quarter of 2018, when global stock markets suffered significant losses, the price of gold rose by a good 7.5 percent. An index consisting of gold mining stocks even gained 13.8 percent in the same period. Such a correlation could also be observed in other periods. However, this is no guarantee that the stabilizing effect of gold will continue to work in the future. The period from spring to fall 2018 is an example of the fact that one cannot always reliably count on a balancing effect of precious metals in the portfolio.
Most recently, monetary policy also made a U-turn and interest rate hikes are no longer an issue for the time being, at least in the eurozone and the US. Persistently low inflation rates are forcing central banks to adopt a looser monetary policy stance. The resulting persistently low interest rate environment offers investors fewer and fewer attractive investment opportunities and could further boost the prices of precious metals - especially as opportunity costs are also low or falling. The supply and demand situation does point to a reduction in the supply surplus. However, the balance should remain positive in the near future (see Fig. 2). So, from a fundamental perspective, there seems to be rather less upside for the gold price. However, the supply and demand situation for gold has been rather subordinate in the past