I bought into a Gold ETF last week, but am having second thoughts, after reading 2021 outlooks from the likes of Goldman Sachs and Morgan Stanley. I'll list the arguments for and against below. Please share your thoughts:
Arguments for:
Goldman Sachs expects that the price of gold will reach $2,300 per ounce by the end of 2021 (20% higher from current prices) because of concerns over rising inflation. Source: https://www.reuters.com/article/us-...nth-gold-price-forecast-to-2300-idUSKCN24T1QA
Arguments against:
As expectations of future inflation rise, so do Treasury rates. In fact, the 10-year Treasury burst through 1% last year (after the Democrats took the Senate). Gold has historically been inversely correlated with long term rates. Interestingly, Morgan Stanley is bullish on inflation in 2021, and believes it could come sooner and faster than most expect, perhaps even as early as Q1. This would dampen the price of gold in my opinion.
Arguments for:
Goldman Sachs expects that the price of gold will reach $2,300 per ounce by the end of 2021 (20% higher from current prices) because of concerns over rising inflation. Source: https://www.reuters.com/article/us-...nth-gold-price-forecast-to-2300-idUSKCN24T1QA
Arguments against:
As expectations of future inflation rise, so do Treasury rates. In fact, the 10-year Treasury burst through 1% last year (after the Democrats took the Senate). Gold has historically been inversely correlated with long term rates. Interestingly, Morgan Stanley is bullish on inflation in 2021, and believes it could come sooner and faster than most expect, perhaps even as early as Q1. This would dampen the price of gold in my opinion.
