Will Gold Price Rise In 2022?

Published on: January 26, 2022
Author: NAI500

Gold Could Test New Highs Of $2,100 Per Ounce In 2022, According to David Lennox

This year, market conditions seem to be lining up for a bump in gold price. A weakening US dollar, soaring inflation rates, and political unrest could drive the price of the precious metal to new highs, topping US$2,100 per ounce, according to Fat Prophets resource analyst David Lennox. (Find the precious metal investment opportunities at the GCFF virtual event on Feb 10, 2022. Register for free now.)

“We do think across the course of 2022, we will see the gold price testing at the all-time record highs, but we can’t see it traveling much beyond that once it gets there,” he recently told CNBC’s Street Signs Asia.

Gold prices hit an all-time high of US$2,076.15 per ounce in August 2020 amid the height of economic uncertainty surrounding the Covid-19 pandemic. Most recently, gold has been trading hands at US$1,830.90; however, with the economy once again sounding alarm bells, gold prices could climb again, this time testing new highs.

Three Factors Could Drive Gold Price Higher in 2022

Millennials are getting their first taste of inflation, and it’s sure to be a bitter pill to swallow. The US Consumer Price Index has climbed 7% over the past 12 months, marking the sharpest incline in 40 years.

The US economy is also presenting a reason for concern. Consumer spending is by far the most significant driver of US GDP; however, with the rapidly rising costs of essential goods and services, the average American household will have less left over each month, which could put the brakes on economic activity.

Then there are cryptocurrencies. Cryptos have taken investors on a rollercoaster ride of ups and downs. Far from acting like digital gold or a viable inflation-proof alternative to fiat, cryptos have taken investors on a rollercoaster ride of ups and downs, acting more like speculative tech stocks than safe-haven assets. Bitcoin is currently trading at US$34,776, down over 25% YTD and nearly 50% from it’s all-time high of $68,789.

Gold tends to shine brightest when other assets are struggling, and several events could challenge stocks and bonds over the coming year. Interest rate increases have the potential to destabilize shakier parts of the economy and fragile markets saddled with debt coming out of the pandemic while mounting tensions in Ukraine, Iran, and the South China Sea present significant geopolitical risks.

And these are just the risks markets are preparing for. Any unforeseen shocks in 2022 could see gold prices take off as investors jump ship on falling asset prices elsewhere.

How to Safely Invest in Gold In 2022

Precious metals, particularly gold, have long been the safe-haven asset of choice for volatility weary investors. And the reasoning is simple. Precious metals are negatively correlated with most other asset classes, providing a reliable hedge against inflation and safety in portfolio diversification. Should you need to exit your position, gold is also highly liquid.

However, like most investments, investing in gold is not without risk; the specific risk will depend on the investment vehicle chosen.

Gold prices are subject to fluctuations, and this volatility is particularly impactful on physical gold, which is entirely reliant on commodity price increases for gains. As a non-producing asset, physical gold also carries with it the lost opportunity to earn passive income. Gold stocks, mutual funds, and EFTs, on the other hand, bring their own inherent risk profiles, while the rising popularity of cryptocurrency is creating new challenges for any investment in precious metals.

So how do you reduce the risk of investing in precious metals? It all depends on choosing the right investment vehicle.

There are several ways to gain exposure to gold falling into two distinct categories: physical gold and gold-derived investment products.

Physical gold – bars, coins, jewelry – is a direct way to participate in the gold market; as gold prices rise, your investment will increase with it. However, this type of investment also requires safe storage and hefty dealer fees. Gold bullion is also comparatively less liquid than other forms of gold investing because of the time and cost associated with selling it.

A more straightforward way to gain exposure to gold is through gold stocks, ETFs, or mutual funds. While the value of these investments tends to rise alongside gold prices, investors also benefit from company performance and increasing stock price. Historically, gold stocks have outperformed gold during bull markets; however, they also tend to suffer greater volatility during market dips.

A Precious Metal Stock Worth Watching: Newrange Gold Corp.

Newrange Gold Corp. (TSXV: NRG) is a Canadian-listed precious metal and mineral exploration company focused on near and intermediary term prospects in favourable mining districts. Originally incorporated as Colombian Mines Corporation in 2006, the company changed its name to Newrange Gold Corp in 2016 to reflect its ongoing geographical diversification, including the acquisition of the high-grade Pamlico Gold Project.

The company’s current projects include a pair of properties in Northwestern Ontario and its flagship Pamlico Gold Project located within the prolific Walker Lane trend in pro-mineral Nevada.

Investment Highlights:

  • Unique opportunity to explore and develop within a high-grade, past-producing gold district in Nevada
  • Large, untested target in the prolific Red Lake area of NW Ontario
  • Acquired the Argosy Gold Mine, a significant past producer in NW Ontario
  • Led by a team of successful mine finders and company builders

Disclaimer: NAI is being compensated for this content. Materials contained in this content are for information purposes only and is not intended to constitute an offering of securities in any jurisdiction. Nothing on this content should be construed as an offer, solicitation or recommendation to buy or sell products or securities.

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