Investors have been through a whirlwind of unprecedented economic challenges over the past few years. From global pandemics and supply chain catastrophes to conflicts in Europe and beyond, the world is waiting with bated breath to see what tomorrow holds. More specifically, many people are wondering if gold is a good investment in 2023, especially given the unpredictability of the recent past and the unenthusiastic predictions of the future.
While nobody can tell for certain, there are many influential factors pointing to a promising performance for gold in 2023. A hangover of challenges from the previous year is going to collide with new obstacles just around the corner. Here are some of the most impactful conditions that could push gold prices higher, making physical gold assets a must-have part of your portfolio.
11 Reasons to Buy Gold in 2023
1. Global Economy Contracting
The global economy is still reeling from the gauntlet of economic setbacks over previous years. Unfortunately, many experts are painting a grim picture for 2023. The International Monetary Fund (IMF) has predicted “the worst is yet to come” as the leading financial institution slashes its global growth prediction to a measly 2.7% for the coming year. Mohamed El-Erian, a former Obama administration aide and a leading market analyst is going a step further by warning of a “profound economic and financial shift” that is well underway. The author of Rich Dad Poor Dad echoed these concerns by calling the entire market “the biggest bubble in world history.”
When so many prominent institutions and leading voices are warning of a veritable economic meltdown on a global scale, people naturally turn to the safe haven of precious metals to protect their wealth from the uncertainty of global economics.
2. Threat of a 2023 Recession
The specter of a massive recession has been stoking fear among investors over the past few months. As 2023 quickly approaches, worsening economic conditions aren’t showing any signs of improvement. At this point, it seems a recession in 2023 is inevitable. Even Jerome Powell, who has been jeered by many for his one-trick strategy for combatting inflation, has admitted that a soft landing following the Fed’s aggressive rate hike strategy is unlikely. Experts predict our financial czars will ease up or stop these rate increases in the second quarter of 2023. As the hope for an easy transition disappears, there’s murmuring of stagflation potentially rearing its ugly head for the first time since the 1970s.
The Fed’s misguided Modern Monetary Theory policies were ridiculed in the past, and now the sour fruits of these failed models are ripe for the harvest. Gold is looking more and more appealing as our economic leaders prove their incompetence time and time again.
3. Weakness of US Dollar (USD)
The US dollar has taken a beating over the past year both in terms of global dominance and trust from a variety of detrimental factors. The US government’s obsession with printing to spend and spending to print is a self-dealt injury that significantly devalues USD. Geopolitical rivals have taken this opportunity to further weaken the greenback. Russia is stockpiling gold bullion in an effort to reduce its dependence on the reserve currency amidst a blockade of sanctions. China is cozying up to Saudi Arabia in an attempt to supplant the petrodollar with the petroyuan. These unprecedented circumstances signal a potential USD collapse.
What if everything fails? People used to buy gold more or less as a hedge. Now people are more concerned about absolute dollar failure.–Eric Sepanek, Scottsdale Bullion & Coin Precious Metals Advisor
The dollar’s position as a reserve currency on the world stage is expected to take a hit in 2023. Retail investors, and nations big and small, are losing faith in the dollar and all fiat-backed assets, making gold an obvious choice due to its inherent value.
4. Ongoing War in Ukraine
Tumultuous economic conditions aren’t the only harsh reality staring investors in the face in the coming year. The geopolitical nightmare that’s unfolded following the invasion of Ukraine is festering with ramifications felt across the world. In 2022 alone, the US government spent over $15 billion supporting the Ukrainian resistance and has made it clear this financial support will continue. On top of the spending pressure, the war is squeezing supply chains, destroying economic relationships, and launching a new energy crisis.
Geopolitical question marks dot the 2023 horizon, leaving investors wary about keeping their savings at the mercy of traditional markets. Once again, gold is looking like a worthwhile investment for the next year.
5. Central Banks Lead Modern-Day Gold Rush
Over the past few years, central banks around the world have been secretly stockpiling impressive amounts of gold. This move towards gold is motivated by the pervasive economic chaos of late and the anticipation of a prolonged economic downturn through 2023. In fact, central banks are holding gold reserves at the highest levels in 47 years. Some governments such as Russia and China are attempting to circumnavigate international sanctions by scooping up gold.
One of the most tried and true investing strategies is watching the moves of investors with more insight, funds, and expertise. Central banks fit that description perfectly, and their actions clearly indicate that grabbing more gold is a must.
6. US Nears Debt Ceiling
As of early December, the US debt stands at a whopping $31.3 trillion which is just shy of the debt ceiling of $31.4 trillion. When the debt ceiling is reached, the government is barred from borrowing anymore. The admin is forced to pool from any remaining cash reserves and from generated income. The Biden administration has spent nearly $4 trillion since taking office, so the government is barreling towards this borrowing limit with no actionable plan to change course.
The ludicrous amount of debt held by the US government is indicative of its misguided financial policies where spending is the solution to every problem and printing more money is never questioned. The value of the greenback weakens with every dollar printed which makes gold a clear alternative due to its stability.
7. Inflation Sticking Around
Inflation has been rattling the economy throughout 2022, driving up living costs, diminishing wages, and pressuring the dollar’s value. These negative effects have been amplified by Biden’s reckless spending campaigns. Although everyone hoped inflation rates would subside to normal levels in 2023, predictions paint a much grimmer picture. The IMF forecasts inflation to sit at 6.5% for 2023. Despite being lower than current rates, it’s still significantly higher than a healthy range of around 2%.
Gold Investments: Your Hedge Against Inflation
What do you do; what do you buy if you want some insurance against inflation or just general economic chaos. It’s time-honored. You need some gold.–Jim Cramer, host of Mad Money on CNBC
Now it may seem counterintuitive to consider spending your hard-earned money when inflation is on the rise, but smart investments such as gold typically act as a hedge against inflation. The gold inflation hedge can be useful because if you invest in an asset that typically maintains or increases its value over time, this could help you protect your economic position when the purchasing power of your cash is decreased. Gold has long been regarded as a stalwart hedge against inflation and economic decline, and 2023 could bring plenty of both.
If you’re invested in gold you can hedge against inflation and ride out most economic storms. Macroeconomists will banter and opine, and you can spend your days listening to them on cable news, but the truth of the matter is, no one can really say for certain how long an economy will slide or how far. Therefore, it is wise to consider ways that you can protect yourself now, and gold can be your shelter from the storm.
Suggested Reading: Is Silver a Good Hedge Against Inflation?
8. 2023 Housing Market Crash
The stock market’s bearish performance throughout 2022 has received outsized attention when compared to the relatively quiet real estate market. As 2023 closes in, many are warning of a potential collapse in the housing market. Morgan Stanley experts predict a 10% drop in housing prices across the country between now and the end of 2024. Considering the housing market comprises a staggering 15% to 18% of the national GDP, even a minor dip in real estate could cause widespread damage.
If the most recent housing crash of 2008 provides any indication, gold prices tend to rise following a real estate collapse, especially as more dollars are flooded into the market in the form of bailouts.
9. Retail Investor Demand for Gold (and Silver) Remains Strong
Central banks and institutions aren’t alone in their efforts to stock up on gold in the face of economic decay. Retail investors have shown a prolonged demand for physical metals. The most recent trend sees the push for gold and silver purchases moving eastward. For example, China reached record levels of gold imports in August, underscoring the Asian market’s growing demand for physical gold and silver bullion.
An unbroken streak of volatility and uncertainty in the markets has led to a fundamental distrust in markets, banks, and governments among investors. People are shifting their focus from growth to protection by divesting from fiat-backed markets and jumping into physical gold and silver coins, gold bars and silver bars.
10. Loss of Faith in Cryptocurrencies
It wasn’t long ago when even credible investors were hailing cryptocurrencies as a reliable store of value. Some went as far as to compare Bitcoin and gold. After a slew of high-profile bankruptcies and scandals rocked the crypto world, this faction of the community has grown noticeably more silent. Most notably, the FTX exchange fallout saw tens of billions of dollars worth of investments disappear virtually overnight due to what appears to be outright fraud.
A leading exchange that was once heralded as an exemplar of the oft-derided crypto space ended up renewing distrust among the public. Skeptical investors are returning to the tried-and-true inflation-fighting properties of gold.
11. Potential of a CBDC
As distrust in digital currencies reaches new heights, the US government decided it was a good time to fiddle with a digital dollar. Executive Order 14067 stops shy of establishing a fully-digitalized greenback but is aimed at exploring the potential of a Central Bank Digital Currency (CBDC). The Federal Reserve’s New York branch has already launched a 12-week pilot program with a CNBC, proving just how close the government is willing to flirt with a complete upending of the country’s current financial structure.
This move towards a digital dollar is further deteriorating the already strained sense of trust people have in the government. Seen as a direct threat to privacy and autonomy, the threat of a CBDC is making physical gold much more attractive.
What will be the price of gold in 2023?
There’s no way to predict the exact price of gold in the future. However, many signs point to an upward trajectory in 2023. Mounting economic uncertainty and global instability are driving investors away from mainstream assets and towards the tried-and-true hedge of precious metals. Besides, the true value of gold lies in its stability and long-term growth which has been proven throughout the mounting challenges of the past few years. Visit our Gold Price Forecasts 2023 page for the latest gold forecasts for 2023.
Don’t Wait to Buy Gold—Buy Gold and Wait!
Why Gold Is Always a Good Long-Term Investment
Gold is the ‘gold standard’ of investments, such a time-honored investment that its very name is synonymous with excellence. But sadly, the ‘gold standard’ in regard to the American dollar ended fifty years ago when President Richard Nixon made it official and detached the dollar from its gold backing. The dollar became a currency valued simply by its relation to other currencies across the globe. Thus, while the dollar began its descent, gold remained, as it typically does, relatively stable regardless of outside factors.
Today, gold is what smart money investors turn to in times of economic instability or when the markets seem more volatile than usual. Investing in gold as a hard asset also has many upsides in addition to hedging against inflation.
Diversifying your portfolio is always a good strategy in times of economic uncertainty, or anytime for that matter. As the correlation between stocks and gold is close to nil, gold is the ideal choice for turbulent economic times. Gold has a history and has long been regarded as a safe haven investment for precisely the fact that its value endures. Thus, gold is an optimum investment for portfolio diversification, especially if you are invested heavily in paper stocks that can shift rapidly based on geopolitical events, the state of the U.S. economy, and so much more.
Refuge from The Grand Experiment
It’s no secret that the actions taken by the Federal Reserve sometimes produce economic effects counter to their supposed intentions. Their experiment has allowed for the U.S. debt to rise to insurmountable levels. With an economy that fluctuates wildly based on policies that shift every four to eight years, gold provides peace of mind, a refuge from the whims of politically-influenced economic decisions. Gold, you can count on, at times when you can’t depend on the transitory value of that paper in your wallet and bank accounts.
As a hard asset gold is a top investment to consider due to its high liquidity. It’s easy to purchase, and easy to sell, so if you’re experiencing a temporary cash flow problem you can quickly sell off a portion of your asset holdings to reclaim financial solvency. This makes it an ideal investment as gold has a history of holding its value over time and is there when you need it, unlike some potentially riskier investments in stocks, start-ups, oil & gas, etc. Wall Street stocks can rally and fall, timing is often key, and it’s possible for a stock to bottom out, but gold, though it may dip, has never gone to zero. Gold is just plain dependable and has a track record through history of being one of the most stable assets for every investor’s portfolio.
Gold Investment Options
Of course, gold is also available in forms other than a hard asset like gold coins and bars that you purchase and store in a secure vault. If you want the security of gold but prefer not to be responsible for holding it, you could consider:
- Digital gold – which is an electronic money backed by real gold reserves
- Gold exchange-traded funds (ETFs)
- Gold mining stocks
Additionally, there are several other things to consider before investing this way. Learn what those are in our FREE GOLD INVESTMENT GUIDE.
Also, when it comes to physical gold investing, not all physical gold products are the same. Investment grade coins may have an even greater upside potential for gold investors as their rarity can drive value up, even when gold prices are down, whereas the value of bullion is generally linked to weight and the spot price of gold. To find out more about why investment grade coins could be your best choice, read: Bullion vs. Numismatic Coins: What You Should Know Before Investing.
Whichever form you decide to purchase or invest in will offer its unique advantages and disadvantages, but the bottom line is that gold is a solid, no pun intended, investment that has been around and will be around, for a long time. Do your research and you’ll likely agree that gold is an investor’s ideal option for securing a financial portfolio.