Gold Investment set to provide Great Returns in 2023 as Société Générale Strategists Foresee an End to USD Dominance
As we approach 2023, strategists at Société Générale believe that gold exposure is set to provide great returns, with the precious metal offering protection against systemic risk. With the end of USD dominance looming and several pivots on the horizon, gold investment is poised to provide an excellent investment opportunity.
It is worth noting that gold has long been considered a safe-haven asset, providing protection against market fluctuations and currency devaluation. It is an asset that investors turn to in times of uncertainty or economic turmoil, as it has been proven to be a reliable store of value for centuries.
In this article, we will take a closer look at why gold investment is set to provide great returns in 2023 and what factors are contributing to this view.
Why is 2023 seen as a pivotal year for gold investment?
According to Société Générale strategists, 2023 will be the beginning of the end for USD strength. This assertion is based on a number of factors, including the ongoing macroeconomic shift towards alternative currencies and the increasing prevalence of digital assets.
Furthermore, 2023 is expected to see a number of pivots that will impact the investment landscape. In particular, the rise of green energy as a global priority is expected to change the balance of power and accelerate the shift towards renewable energy sources. This would likely lead to a decline in traditional energy assets and a corresponding rise in green energy stocks.
In addition, there is growing consensus that inflation is set to rise over the next few years, driven in part by government spending to combat the economic impact of the COVID-19 pandemic. This will likely lead to increased demand for safe-haven assets, such as gold, as investors seek to protect their portfolios against the erosive effects of inflation.
What makes gold a good investment?
Gold has a number of properties that make it an attractive investment option. First and foremost, it is a finite resource, meaning that its supply is limited, making it inherently valuable. It is also durable and easily divisible, making it a convenient store of value.
Furthermore, gold is also a global asset, with a high level of liquidity and low correlation to other asset classes. This makes it an effective diversification tool, reducing risk and contributing to a more stable investment portfolio. In times of economic turmoil, gold has historically maintained its value and even appreciated, providing a buffer against losses in other assets.
What are the implications for other asset classes?
According to Société Générale strategists, fixed income (both sovereign and credit) is expected to outperform equities in the coming years. This is based on the assumption that interest rates will remain low, reducing the yield on equities and increasing demand for fixed income investments.
This view is supported by recent trends, which have seen a significant increase in the issuance of green bonds and sustainability-linked bonds, as investors seek to support environmentally responsible companies and projects. This trend is expected to continue and may further increase demand for fixed income assets.
Conclusion
In closing, gold investment is set to provide great returns in 2023, with the precious metal offering protection against systemic risk and a valuable diversification tool. As the world moves towards renewables and alternative currencies, and inflation expectations rise, gold investment is well-positioned to yield strong returns.
In contrast, while fixed income investments are expected to outperform equities in the coming years, investors should remain vigilant and ensure their portfolio is appropriately diversified to take advantage of the changing investment landscape. Ultimately, a balanced portfolio that includes gold investment as well as other asset classes is best positioned to weather the coming economic storm.
