The “Bull” At the beginning of 2022, many on Wall Street confidently decreed that, “Gold reclaims its title as a haven for newly minted billionaires, even as cryptocurrencies continue to gain market share.”1 It was widely believed that gold was in for an atypically successful year. Some pundits, including Robert T. Kiyosaki, endorsed gold as a useful hedge against inflation while citing his general distrust of the Federal Reserve, and the U.S. Treasury. In short, he believed it was safer to “be in silver and gold, and even bitcoin…than the U.S. Dollar.”2
The Reality Gold began 2022, at a value of $1,814 and climbed to a high point of $2,049 by March (following Russia’s invasion of Ukraine). But, by October, any enthusiasm for gold was succinctly crushed when it hit a low of $1,627. While gold eventually did recover, it experienced a gain of just 0.5%, and closed the year at a value of $1,824.3
Starting in April of 2022, the U.S. Dollar Index demonstrated a plainly converse growth-trajectory when compared directly to Gold.4 By August 30th of 2022, the ICE US DOLLAR Index was up to 57897.005 as compared to the price value of 1730.306 attained by GOLD on the same date.A stark difference, that underlined gold’s uncertain ability to hedge against inflation and uncertainty.
The Point Making investment decisions, based on random speculation around specific commodities, like precious metals, does not guarantee investment returns. While the value of gold has grown over time, it has been outperformed over the long-term by most major asset classes, including stocks and bonds. However, those investors who were dazzled by gold in 2022 likely lost money, or, made minimal gains while enduring undue stress. Remember, all that glitters isn’t gold.Including—as a robust investment—gold.
1 Holderness, Kate. “Byron Wien and Joe Zidle Announce the Ten Surprises of 2022”.January 3, 2022. Blackstone. 2 Kiyosaki, Robert T. How to invest in gold, silver amid record inflation (VIDEO). Fox Business. 3 Gold/US Dollar Spot. CNBC. 4 Gold Mining Inc CEO: This is how inflation impacts gold. Fox Business. September 9, 2022. 5ICE US dollar Index Combined Total Reportable Short Positions. August 30, 2022. 6Gold Price in US Dollars. August 30, 2022.
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