gold bars and financial investment graph

Is gold a good investment in 2022? Many investment strategists say, YES—and several commodities experts predict that the price of gold is just beginning a climb that may see gold hit a new high in 2022.

However, gold price predictions are not the only determinant to ponder when assessing 2022 as a feasible year to invest in gold. It is also critical to thoroughly consider possible shifts in gold prices. Considering gold investment with a top to bottom analysis of all the obvious factors as well as the potentially repressed ones will allow investors to gain a comprehensive view of the gold market and inform their expectations for the pricing of this extremely precious metal.

Learn more about the factors influencing the price of gold this year below.

Why Gold Is a Good Investment in 2022

Why is gold consistently acknowledged by many economists to be a good investment? There are of course many specific reasons, but in 2022 perhaps the best of them all is, in a word—inflation.

The global pandemic that has raged on for more than two years now created supply chain problems, unemployment, and more that disrupted economic growth. As a result, inflation has continued to rise, but gold prices have typically remained stable in times of economic turbulence and recession, and spot gold prices are again looking strong for 2022.

10 Reasons to Buy Gold in 2022

  1. Inflation: From “Transitory” to “Severe Threat”
  2. Gold Price May See New Historic High in 2022
  3. U.S. Dollar Weakening
  4. Stock Market Crash in 2022?
  5. Geopolitical Crises
  6. Central Banks Are Increasing their Gold Buys
  7. U.S. & Global Debt Continues to Soar
  8. Could the Dollar Collapse in 2022? It’s Best to be Prepared!
  9. Cryptocurrency May be Heading for a Crash
  10. Physical Gold Demand Continues

1. Inflation: From “Transitory” to “Severe Threat”

Inflation, it’s a word that is feared by the mom-and-pop shops of Main Street as well as the high-rise offices of Wall Street. Business fears it of course because when the purchasing power of the U.S. dollar decreases, American consumers typically tighten their wallets and cling to their cash, curtailing their overall spending.

U.S. Inflation at 40 Year High

There’s certainly no denying that inflation is here, as the consumer price index has surged. In fact, Labor Department data reported that U.S. inflation recently hit a 40 year high in December 2021, and those numbers are causing headaches for the Biden administration, the Federal Reserve, and of course the American consumer. How high will inflation go? Could we see double-digit inflation in 2022? Are you sure you want to wait around and find out… when it may be then too late to secure your portfolio against runaway inflation?

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 2022 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.

Free Inflation Hedge Guide

2. Gold Price May See New Historic High in 2022

gold prices on the rise

…I’m very positive on the outlook for gold… for next year, and the reason is because of what’s going on with the macro environment, particularly inflation.
–William Rhind, GraniteShares founder and CEO

Gold hit its highest price of $2,058 per ounce in 2020. Now, with the precious metal starting off the year strong, it has many analysts, banks, and big investors thinking 2022 could be the year gold prices see a new high.

David Lennox, analyst at Fat Prophets, has a $2,100/oz price target for gold. In a recent CNBC interview he stated, “We do believe that high momentum in inflation and that lower U.S. dollar is going to drive the gold price higher in 2022.” He added that if the Russian/Ukraine situation escalates, “If that happened, then we would see the gold price reacting quite significantly and our … $2,100 an ounce [target] would probably get here sooner rather than later.”

Goldman Sachs recently raised their 12-month price forecast for gold from $2,000/oz to $2,150 an ounce. Goldman sees gold as a great hedge to protect against a growth-slowdown and falling equity valuations.

In a recent interview on Kitco News, Bart Melek, Global Head of Commodity Markets Strategy at TD Securities, speculated that the Federal Reserve’s dovish policies may position Fed Funds rates for a prolonged period in a manner that would be, “a very good story for gold longer term.

GraniteShares founder and CEO William Rhind also sees a potentially prosperous year for gold, stating in a CNBC interview, “…I’m very positive on the outlook for gold… for next year, and the reason is because of what’s going on with the macro environment, particularly inflation.”

With so many analysts predicting a possibly outstanding year for gold prices, it’s easy to understand why investors are making moves now to diversify their financial portfolios with gold.

3. U.S. Dollar Weakening

us dollar decline

The U.S. dollar has been falling and rising somewhat unpredictably for a long enough period now that some extreme economists have shown concern about a potential collapse.

However, the consensus remains that it’s highly unlikely the dollar will totally fall to an unrecoverable level. While it may not be time to panic, it’s clear that the U.S. dollar is weakening on the global market. In fact, as reported by Reuters in 2021, the dollar fell to the bottom of the global currency heap while the euro rose 4% against it, the Brazilian real went up 6%, and the Chinese yuan saw a 3% rise. Reporting in November then showed the dollar coming out of 4 weeks of strong gains.

Uncertain Future for Dollar Brings Investors Back to Gold

Now, as we move solidly into 2022, Bloomberg reports that “Everyone from Morgan Stanley to Sumitomo Mitsui Trust Asset Management to Lombard Odier predict a stronger greenback in 2022,” but the expectation is that its “advance will be tempered.” Analysts agree that upcoming actions by the Fed will certainly make an impact on how the dollar fares against world currencies for 2022 and beyond. The signs are hopeful that the dollar will continue to maintain its edge over the euro, for now, but further pandemic problems and economic disturbances make these times uncertain, and uncertainty favors gold as an investment. Gold has a history of stability in times of economic variability.

4. Stock Market Crash in 2022?

stock market volatility

It’s been nearly one hundred years since the great crash of 1929, a major catalytic event in a series of actions that brought the Roaring Twenties’ economic prosperity to a halt and pushed America into a dark period of hard times and depression bread lines. Nearly one hundred years have passed since that difficult period in America’s history, but we find ourselves again, in 2022, looking at the economic signs and wondering if it could happen again.

U.S. Economy: Analyst Warns of Superbubble

Outspoken critics of the Fed, such as Jeremy Grantham, co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo (GMO), have warned that the U.S. economy is experiencing a “superbubble” in stocks, commodities, and housing that has a real chance of serious collapse. Grantham recently stated:

The final feature of the great superbubbles has been a sustained narrowing of the market and unique underperformance of speculative stocks, many of which fall as the blue-chip market rises. This occurred in 1929, in 2000, and it is occurring now.
–Jeremy Grantham, co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo

Stocks Drop to Start 2022 – The Fed Rate Hikes Likely to Deepen Losses

Investors are getting apprehensive, and rightly so as the stock market had a rough start to the new year:

  • The S&P 500 posted its biggest January decline since 2009, down 5.3%.
  • The Nasdaq ended down 8.9% for January, it’s worst month since the start of the Pandemic.
  • The Dow Jones Industrial Average ended the month down 3.3%.

With already correction type losses starting off the year for stocks, economists are speculating just how deep of a slide we might see in the coming months, and with the Fed’s recent announcement of a likely interest rate hike as soon as March of 2022, the consensus remains that it is a time to tread cautiously. Which again, points to gold investment as a means to protect your money and diversify your portfolio. The Fed’s actions may be out of your control, but your ability to choose investments such as gold to help you weather economic instability remains very much in your control.

5. Geopolitical Crises

geopolitical crisis effect on gold

The global pandemic and myriad varying approaches to contain it by governments across the globe have shaped and will continue to shape economic growth and stability. While the Biden administration has proposed broad sweeping legislation in its effort to “build back better,” some fear that could bring increased inflation and more debt that is untenable. Across the globe, the dollar has dipped and struggled to maintain its edge over currencies it once dominated.

Chinese Housing Market in Trouble—Ripples Could be Felt Across Globe

Adding to the concern of the U.S. dollar’s market strength, growing problems in China’s housing market could also have deleterious effects on the dollar, and global economy. Real estate giants in China have been struggling across the board, with one of their biggest, Evergrande, recently defaulting on foreign bonds upwards of $1 billion. These are troubling signs for a global financial structure that so often ties one country to the next economically. The fear is palpable and echoed by Treasury Secretary Janet Yellin who remarked that “A slowdown in China, of course, would have global consequences.”

Russia & China Moving Away from U.S. Dollar

Pivoting to Russia, tensions between the U.S. and Russia over Putin’s policies, most recently regarding his deployment of over 100,000 troops to the Ukraine border, have created concern that Americans will feel the effects of all this saber-rattling in their wallets.

Escalating tensions abroad and the actions of leaders such as Jiping and Putin who oversee behemoth economies are giving investors reason for concern, especially as Jiping, Putin, and other world leaders, have made clear moves to ditch the dollar in favor of the euro and other diverse world currencies.

So, what will tomorrow hold? Will new global crises appear? The future is uncertain, and though analysts make predictions, it’s only real news until it happens. Thus, preparing for economic uncertainty is paramount and gold has a proven track record that is undeniable, maintaining its relative stability regardless of the actions and/or the events that emanate from Wall Street, or the Kremlin.

6. Central Banks Are Increasing their Gold Buys

Central banks around the world are increasing the gold they hold in foreign exchange reserves, bringing the total to a 31-year high in 2021.
–Nikkei Asia

In tough times, people gravitate towards comfort, a return to a place in which they felt the most secure. Banks do the same. In periods of tumultuousness, when the global economy is sliding, when a global pandemic is unrelenting, banks tend to go further and deeper into their conservativism—their comfort zone. History has shown that when the going gets tough, the banks get skittish, and head for the greatest security they can find and that… is often gold.

2022 Outlook for Gold is Bright

Gold has value globally and is not tied to any particular economy, so whether the trading is done in dollars, euros, francs, pesos, or any currency for that matter, gold is valued highly. Nikkei Asia reports that “Central banks around the world are increasing the gold they hold in foreign exchange reserves, bringing the total to a 31-year high in 2021.” Many economists predict the outlook for gold in 2022 will be even brighter than 2021, which was a notably good year. As the banks acquire more and more gold, private investors who have gold in their portfolios will reap the benefits of a high-value asset with a history of stability in the market and a demand on the rise.

7. U.S. & Global Debt Continues to Soar

us and global debt

Global debt is out of control and unfortunately the outlook is bleak for the foreseeable future. Currently it’s on a collision course with a mountainous number, a number so large that it is hard to wrap your head around—$300 trillion. Brookings reported that “In 2020, total global debt rose by 30 percentage points of GDP, to 263 percent of GDP—the largest single-year increase since at least 1970.”

In the U.S. debt has been on the rise, climbing at a furious pace, seemingly unchecked for years, and conservative legislators in Washington are concerned that President Biden’s plans for combatting a sagging coronavirus economy will only drive debt higher.

U.S. national debt exceeds $30 trillion for first time
AXIOS, February 1, 2022

Fear of Global and Domestic Debt Driving Investors Back to Gold

Debt recovery requires a calculated and measured response to multiple factors that are negatively impacting economic growth, as such, spending must be reined in. The global pandemic has not been kind to the concept of debt recovery with job numbers tanking, consumer spending down, and multiple deep dives into the treasury for emergency public assistance. Debt is on the rise at home and abroad and therefore investors are again looking to gold to be their safe haven.

Inflation may rise in 2022 and the pandemic may continue at its pace or even increase if a new strain is discovered, but if you’re invested in gold, you’ll have added security to hedge against financially-impactive events when they occur.

8. Could the Dollar collapse in 2022? It’s Best to be Prepared!

–Eric Sepanek, Scottsdale Bullion & Coin Precious Metals Advisor

Could the U.S. dollar collapse in 2022? In a volatile global marketplace further disturbed by endless money printing, anything is possible; however, most analysts believe that the dollar will weather all coming storms for 2022. That should not be cause for celebration though, as the dollar is facing an uphill battle to remain king of the financial hill.

Economists present a multitude of factors that may influence the dollar’s rise or fall in 2022, but one factor that cannot be ignored is stagflation, the financial trifecta in which soaring unemployment numbers combine with high inflation and subpar economic growth.

Recession Possible for 2023

Stagflation’s attack on economic prosperity could be long and hard and the inflation-damaged dollar could take a beating on the world stage. China and Russia, as mentioned earlier, have taken measures to shun the dollar in favor of other world currencies, and a long battle with stagflation domestically could see the dollar dipping downward in all manner of financial transactions globally.

Forbes reported in late 2021 that the U.S. would probably avert a recession in 2022, but depending on the actions of the Fed, the U.S. economy could fall into recession in early 2023.

With so many moving parts, it’s impossible for even the best analysts to predict exactly where the economy will land in 2023, but there’s enough information out there currently to see the writing on the wall—that it’s high time to pull out of risky ventures and enhance your portfolio with stable investments. Gold is a proven hedge against inflation and with the dollar’s future uncertain, gold is a diversification option you need to consider.

9. Cryptocurrency May be Heading for a Crash

bitcoin cryptocurrency

Cryptocurrency—digital currency based on blockchain technology—it’s definitely not… your parent’s money. Technology has entered nearly every sector of business so it should have been expected that finance would also see sweeping changes as technology expanded. It did, and cryptocurrency is one of but many new advances in the financial world. The crypto market has expanded at a dizzying speed. Forbes reporting has stated that the cryptocurrency market cap has even hit $3 trillion. The list of cryptocurrencies is long, and growing, and many of them had a good year in 2021, but will their good fortune last?

Potential Fed Rate Hike Driving Crypto Value Down

Bitcoin, which has proudly remained at the top of the leaderboard for quite some time now, may be in for a tough year with some analysts predicting a crash.

Carol Alexander, professor of finance at Sussex University, recently explained her thoughts on bitcoin’s potentially troubled future saying, “If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year.” Further, a recent Forbes headline detailed crypto’s brewing problems—“Major Cryptocurrencies—Including Bitcoin, Ethereum—Plummet After Fed Minutes Signal Looming Interest Rate Hikes.”

Will crypto further fall in 2022? The prevailing financial winds seem to indicate that is a real possibility and as such investors are turning back to gold again to prepare for what may come. In addition to potential crypto crashes, global politics may also be pushing investors to the precious metal.

Analysts have speculated that in recent years the buzz and excitement surrounding crypto had been luring precious metal buyers away from their traditional investments as they dipped their toes into the crypto pool. Could change be coming?

Global Governments Losing Faith, Distrustful of Cryptocurrencies

The allure of crypto may be fading at last, as some major banking institutions and governments have proposed bans on crypto. Russian banks have long been distrustful of crypto and as recently as last week took that distrust a step further when Russia’s central bank proposed a ban on the use and mining of cryptocurrencies on Russian territory. Putin has taken a softer line however, offering hope for crypto to prosper citing “competitive advantages” his country has in Bitcoin mining.

As for China, it’s the end of the road for crypto there as China has now declared all cryptocurrency transactions to be illegal. With hard bans like these now spreading across the globe, the expectation is that scores of investors who may have strayed away from gold to follow crypto’s exciting journey are running back to gold where the stability has always existed. Gold remains a solid investment and as investor demand increases, gold prices will likely continue to go up, thus getting in on gold sooner as opposed to later is something you should consider as a means to secure your financial portfolio.

10. Physical Gold Demand Continues

physical gold demand

Gold has been in demand throughout history. Ancient civilizations valued it for its luster, malleability, and use in the creation of jewelry and personal items, as well as a measure of status, and for its application in the arts. Today, gold’s uses, and the demand for physical gold has only increased. Coin News’ recent reporting stated that U.S. Mint gold bullion sales have been accelerating with American Eagle gold coins and American Buffalo gold coins especially seeing high sales rates.

It’s clear that in light of pandemic worries, inflation realities, and trepidation mounting in regard to economic policies coming out of the White House and the Fed, that investors are rushing to gold to secure their financial positions.

Gold Prices Hit Highs, Could Rise More in 2022

January 2022 reporting from Kitco provided further evidence of gold’s rally stating that prices are “hitting two-month highs.” The global markets are volatile currently and perhaps may stay that way for some time as the world tries to unbury itself from coronavirus’ devastating economic impacts. Coupled with geopolitical risks, investor anxiety has increased dramatically and thus safe havens such as gold are again in high demand.

Don’t Wait to Buy Gold—Buy Gold and Wait!

Why Gold Is Always a Good Long-Term Investment

gold bullion chart

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.

Diversification

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.

Liquidity

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
However, it is important to note that having paper-backed gold, instead of real physical gold in your possession, is not true diversification.

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.

Additional Sources  

Bart Melek interview / Kitco News
https://www.youtube.com/watch?v=QpiEZEcjjOw
(quote pulled: 7:05 – 7:28)


William Rhind interview / CNBC
https://www.cnbc.com/2021/11/13/gold-set-to-rally-in-coming-months-experts-say-key-level-to-watch.html
(quote pulled: 3:28 – 3:38)


“Let The Wild Rumpus Begin”
https://www.gmo.com/americas/research-library/let-the-wild-rumpus-begin/
(Approaching the End of) The First U.S. Bubble Extravaganza: Housing, Equities, Bonds, and Commodities By Jeremy Grantham