Gold is very expensive in periods of recession. At what price could it reach the end of the year

History shows that, in each major recession of the last two decades, gold has provided solid yields, with average winnings of about 15%. Thus, the price of gold increased by 16% during the DOT-Com crisis of 2001, by 25% during the global financial crisis 2007-2009 and also by 25% during the 2020 pandemic.

Gold remains one of the best performing assets traded on the stock exchange. Photo archive

Gold remains one of the best performing assets traded on the stock exchange, with an increase of over one third from the beginning of the year.

Since mid -August, the price of yellow metal has registered a new advance, increasing by 11% in just three weeks, from $ 3,300/ounce to over $ 3,650. This rapid evolution not only did not weaken the impulse of the ascending market, but consolidated, generating bold forecasts from Wall Street analysts. To put in perspective, in 2005–2006, the gold was listed at only $ 500–600/ounce.

Price estimates for the end of the year

Goldman Sachs bankers reconfirmed their estimation for the price of gold to reach at least $ 4,000 by the end of the year. In a recent analysis, however, they consider an even more spectacular growth, up to $ 5,000/ounce. The condition for such record growth is that only 1% of the US government titles in private possession will be transferred from bonds to various gold investment products. In other words, if the economists or private investors follow the example of the big central banks and begin to replace the state securities.

The expectations for a significant decrease in interest rates in the US, along with the continuous purchases of central banks in emerging economies, impulse the rapid increase in gold price. In parallel, the global demand exceeds 5,000 tonnes annually, being fed not only by central banks, but also by emerging economies, China playing a central role in this dynamic.

Increase with 20% in pandemic

History shows that, in each major recession of the last two decades, gold has provided solid yields, with average winnings of about 15%. Thus, the price of gold increased by 16% during the DOT-Com crisis of 2001, by 25% during the global financial crisis 2007-2009 and also by 25% during the 2020 pandemic.

Usually, any temporary decrease caused by liquidity constraints is followed by a strong ascending trend, confirming the resilience of precious metal.

The history of Romania offers important lessons. In the 1990s, hyperinflation eroded the economies of the population, and due to the lack of financial education and easy access to gold, most people focused on real estate or bank deposits. The crisis of 2008, with the austerity measures, the increase of unemployment and the loss of confidence in the real estate market, have again stressed the role of gold as a stable and safe landmark to protect the value of economies.

Tavex specialists point out that gold should not be regarded as a privilege reserved for the wealthy. Accessible options, such as 1 gram bullion or funds traded on the stock exchange with low entry thresholds, allow anyone to diversify their savings. At the same time, it is important to note that jewelry does not equate with investment gold, involving significant additional costs and VAT, while investment quality in the European Union is exempted from VAT. Authenticity represents another essential factor: only mints and refineries can guarantee, not commercial certificates.

“In periods of uncertainty, gold is not only a luxury, but a necessity. We encourage people to look at gold as a practical and accessible tool for protecting economies, and not as an exclusively reserved asset. With options such as 1 gram okes or low entry threshold ETFs, anyone can start building a safety plan. Even small and constant investments, made over time, can help maintain purchasing power, reduce inflation exposure and strengthen long -term financial security. Gold has proven resilience in each major crisis of recent decades and continues to be a trusted landmark for those looking for stability”Said Victor Dima, manager of the Tavex Romania treasury department.

Perspectives for Romania

Looking at the next 12 months, the perspective for Romania aligns with the CFA Institute Romania opinions. A tempering of inflation is estimated compared to the current level of 7.8%, although the risk of deflationary pressures remains low. The projections for the EUR/RON course indicate a depreciation of the lion in the medium and long term, and an increase of about 15% of the monetary mass supports the maintenance of an inflationary climate. Thus, even if the inflation slows down, the pressure on the power to buy citizens will continue, highlighting the importance of diversifying economies and considering gold as an essential landmark.

Regular economies, even in small amounts, along with debt reduction, can build long -term financial safety. Keeping money exclusively in cash or current accounts leads to the loss of purchasing power by inflation, while diversification in bank deposits, state securities, actions, real estate and gold offers much more solid protection. A balanced portfolio, supported by multiple sources of income, ensures the necessary stability in a volatile economic environment.