The gold market is at a crossroads: what to expect next? Forecast March 22, 2021

On March 20, 2021, the day of the Vernal Equinox occurred and, coincidentally, the Novruz holiday for many Muslim peoples. We have already mentioned that a time window of +/-10 days from the days of the spring and autumn equinoxes is the ideal time for the completion of old and the beginning of new trends / processes - both in politics, economics, markets, and in private life.

And just last weekend, a large-scale wave of protests against Covid restrictions and lockdowns swept through a number of capitals of leading European countries - which is typical, with the leading Western media in deathly silence. Apparently, the protest wave will grow and spread, as people are very tired of lockdowns. And huge segments of the service economy were simply destroyed. This is a recipe for socio-political instability.

Meanwhile, yields on long US Treasury securities continued to rise, which led to the expected (and predicted by us in the previous review) correction in stock markets.

However, it was symptomatic that gold stopped “reacting” to rising yields on 10- and 30-year American bonds. Despite the continued rise in yields, gold not only stabilized (unlike the stock market, by the way), but even began to grow.

We predicted this situation, pointing out that the price of gold reached the “bottom” of the correction on March 8, 2021 at $1.676 dollars per ounce, and we do NOT expect to see lower gold prices.

This is confirmed not only by trend lines and technical indicators of oversold conditions, as well as analysis of temporary cyclical patterns, but also by the general emotional background (sentiments), which are deeply negative in the gold market. 8 out of 10 financial analysts expect the fall to continue - and this tells us that the fall will not continue. However, we do not expect a sharp increase yet, due to the fact that the US Federal Reserve has not yet decided to target the yields of American long-term government securities. But we believe it is a matter of time.

In the meantime, the Fed has “only” announced the continuation of asset purchases of $120 billion per month. This is enough liquidity to prevent any dramatic decline in stock markets. We believe that in the next 2 months there will be more of a “sideways consolidation” in the markets before further takeoff.

Gold price forecast in 2021

Official discount prices for gold and other precious metals are established by the National Bank of the Russian Federation every working day. The basis is taken by fixing on the London spot metal market, and then converted into rubles at the exchange rate to the US dollar.

On a note!

For calculations, take the US dollar to Russian ruble exchange rate, which is valid on the day following the day the discount prices are established.

The discount prices established by the National Bank are used in the accounting calculations of credit institutions.

In the previous year 2021, the most important driver that influenced price increases was the coronavirus pandemic. But in 2021, this factor becomes less relevant. They are no longer so afraid of an increase in the number of cases, since vaccination is imminent.

A similar situation will affect other drivers.

Positive quotes for rising gold prices:

1. Low lending rates and the risk of dollar inflation. During the coronavirus period, the Central Bank is forced to reduce interest rates to support the economy. Money becomes more and its value decreases. The lower the price of the dollar becomes, the more expensive gold is.
2. High demand for protective assets. Demand for gold was high in the previous year due to the crisis. It is unknown when it will end, so there is a high probability of an increase in the price of gold.
3. Global economic recovery. Thanks to vaccinations, economic growth is expected in many countries, accordingly, the demand for precious metals will increase.

Negative quotes that may affect the growth of gold include proximity to historical highs (the price of gold is much higher than cost) and oversaturation of the market.

Gold is forecast to grow by 5-10% in 2021. But some experts believe that this will not happen and that the decline will continue.

What about the ruble exchange rate?

The behavior of the ruble in the spring of 2021 will mainly be dictated by several factors: rising yields on long-term American government bonds, geopolitics, as well as probable panic in adjacent markets.

In particular, on Saturday, March 20, Turkish President Recep Tayyip Erdogan removed the head of the Bank of Turkey (for the second time in the last 4 months), who pursued a tight monetary policy and raised the key rate of the Turkish Central Bank from 10% to 19%. This has already caused a panic sale of the Turkish lira, whose exchange rate against the dollar at the opening of the Hong Kong stock exchange fell by almost 20% - to 8.5 liras per dollar. Such panic in one local developing market can spread to adjacent markets, one of which is Russia and the ruble.

Yields on long US bonds continue to rise, reducing the potential attractiveness of emerging markets and causing capital outflows. Finally, specific geopolitical risks are associated with Russia, due to the new American administration, which is negatively disposed towards Russia (and personally towards V.V. Putin), threatening to introduce more and more new sanctions.

In view of all these inputs, we believe that the ruble will test the level of 76 rubles per dollar in the coming weeks, despite the increase in the rate of the Central Bank of the Russian Federation.

What will happen to gold prices from 2021-2025?

The gold price forecast for 2021-2024 is not so optimistic. It is expected that by this time a decline will begin, but not such a significant one. It will be associated with a new cycle of the global economy, as well as an increase in production volumes.

In the myrrh economy, the price of gold is usually quoted not per gram, but per ounce. Gold price forecast 2021-2025:

It is very difficult to say that the average numbers will be exactly that. This is due to the unstable macroeconomic situation; in 5 years, many events can happen in the world that will affect the final exchange rate.

On a note!

Raw material prices are much easier to determine. But the price of gold is highly dependent on economic regulators.

How much does gold cost in a jewelry store in the summer of 2021?

Jewelry stores had a hard time. Many closed and did not make a profit for more than a month. But most jewelry chains have begun to improve the quality of their websites and delivery.

I wanted to write an article just after visiting the online store of one of the largest participants in the Russian jewelry market.

It is not possible to track price changes from the beginning of the year until mid-summer. But you can glance at the virtual storefronts and clearly notice the changes.

Small jewelry, up to 2 grams, today sells for 7-10 thousand rubles . This suggests that the cost of 585 gold has exceeded 5,000 rubles per gram. At the same time, last year I went to jewelry stores and the cost of gold, more than 4,000 rubles per gram, seemed inadequate.

Yes, again I will say that jewelry stores are understandable. They try to provide service, delivery, and a good online store. All this costs a lot of money.

Apparently, we just have to get used to the fact that the usual price of gold in a jewelry store will now be 6-7 thousand rubles per gram of 585 purity.

Prices and price rates per gram of gold today

In Russian banks, the price per gram of gold is indicated in rubles. The meaning changes constantly as the situation in the world changes. At the moment, there is a slight increase in the cost of 1 gram of gold:

Since the price of gold changes little, many people consider investing in gold to be a safe haven. This option is ideal for long-term investing.

How to determine carat content

There are two systems used to indicate the purity of gold:

• carat;
• metric.

Carat determines the percentage of pure Au. The system is common in Great Britain, America, Switzerland and a number of other European countries. Among the British, 9-carat gold is popular, in the United States - 10, 14-18, India - 22, and the Chinese prefer 24 carats.

The purest alloy is 24 carats. To calculate the proportion of additives, you need to subtract the carat from 24. 9K contains 9 parts of gold and 15 additives.

Where and how to invest money in gold correctly step by step

Before purchasing gold for storage, you need to understand what investment option is planned: short-term or long-term, in order to choose the right strategy and method in the future.

All gold financing options are divided into two groups:

• physical purchase;
• paper gold.

These two categories of investments have their own characteristics.

Physical gold

A person in Russia cannot come to a factory or gold mining company to directly buy a gold bar or product. Purchase is possible only through a bank, exchange or other intermediary. Today you can purchase several options for physical gold:

1. Jewelry. Purchasing this option is as easy as pie, since earrings, chains, and rings are sold in stores and pawn shops. But this option is not very profitable for the investor. Precious metal products are an alloy and not a pure product. Also, upon purchase, the buyer pays VAT, which is not returned upon sale. In general, the acquisition of gold products is illiquid, since when sold, they will offer no more than half of their real value.
2. Ingots. You can purchase them in banks, and goods of this type have the best purity - 999. You will also need to pay VAT upon purchase. Another serious point is that you can only sell the bullion to the selling bank, and some of them are reluctant to even buy back their goods. An interesting point is that the difference in rates between buying and selling depends on the weight. The greater the weight of the product, the lower its price. This method is also not suitable for generating quick income.
3. Coins. A very questionable way to generate income. To buy really valuable coins, you need to be an expert and understand which ones will increase in value over time.

On a note!

Purchasing physical gold will not provide an opportunity to make money by selling it later, since even experts do not know how the gold exchange rate will change.

Paper gold

This option is similar to storing money on a card, but you won’t be able to touch the gold. When purchasing, a person receives only a contract indicating the acquired gold reserve, and he will not have the precious metal itself:

1. Compulsory medical insurance (unidentified metal accounts). An account is opened in the bank, which indicates the amount of metal purchased. If the exchange rate rises, its quantity does not change, but the cost increases. This way you can earn money. If after some time the price of the precious metal increases, then you can sell and make a profit.
2. Mutual funds. You need to find funds that invest in gold. Not a very profitable option, since the management company will charge a commission. And if the price of gold does not rise, then the person will suffer losses.
3. Purchasing precious metals on the market. The danger is that you can go bankrupt.
4. Purchase of contracts. The option is designed for short-term profit making. Sales are carried out on the derivatives market. This requires the ability to analyze and guess. High risk of capital loss.
5. Shares of gold mining companies. This is an option for real investment, in which constant profit will depend not only on the price of the metal itself, but also on the work of the company and its profit.

As you can see, any method of investing in gold has a number of disadvantages. To earn large sums from buying gold, you need to be able to think ahead.

What is carat

The name of the metal comes from the Latin word aurum - “light of the rising sun.” The term “carat” is used to indicate the weight of jewelry. The generally accepted abbreviation is ct. The weight of one carat is 200 mg. In England, this unit is used to determine the purity of gold. The higher the carat number, the fewer impurities in the metal. Depending on the alloy, metal is divided into 7 classes.

Origin of the word

The word "carat" comes from the Arabic qīrāt, the Latin carat, which means "carob pods". The plant was valued by jewelers in eastern countries. The fruits were distinguished by a constant shape, and the ancient masters called them “curatonia”.

The Egyptians, Romans, and Greeks were looking for a standard for comparing precious stones. This is how the comparison went with the seed, which weighed almost 200 mg.

How to convert to the metric system and sample correspondence table

In Russia and the CIS countries, the metric type of notation is common. It refers to the amount of Au without impurities per 1000 particles. A 750 sample product contains 750 parts of pure metal and 250 particles of impurities. That is, each kilogram of this sample will contain 750 g of gold and 250 g of alloys.

You can convert the carat system to the metric system using the formula:

24*Y:1000, where Y is the fineness of gold in the metric system.

For example, 24*375:1000 = 9. 375 gold in the metric system is equal to 9K.

Convert the metric measurement system to carat using the formula:

1000*X:24, where X is the carat measurement system.

1000*9:24=375.

How to correlate the metric and carat systems is indicated in the table.

Difference between 14 and 24 carats

The most important difference between the metals of these samples is the content of impurities. For 24 carats, according to GOST No. 30649-99, the ligature does not exceed 0.1%, for 14K – 41–41.5%. This means that the highest sample consists of almost 100 percent Au, and 585 - only 58.5%.

Cleanliness, hardness and durability

24 carat gold is highly chemically resistant to aggressive environments, but its mechanical properties leave much to be desired. Products made from it are soft, easily deformed, the surface is scratched and dull.

A product made of 585-grade metal does not lose its shine over time, and gains hardness and strength thanks to the addition of copper.

Color and price

Color 24K – bright yellow. The authenticity of coins and chervonets was checked using heating. If the color was red, then the metal was clean. As the gold cools, it acquires its primary color. Due to the small amount of impurities, the color does not change.

14K metal has a wider color palette. A high content of copper gives a red tint, silver and copper - yellow, silver - green.

The price of samples differs significantly: the average price of a gram of 24 carats is 2500 rubles, 14K is 1600 rubles.

How to distinguish gold from gilding

Counterfeiting of jewelry and high-quality items is common. The Assay Office claims that 15% of all products are counterfeited annually. Basically, products made of silver, copper, brass, coated with a thin layer of 24 carat gold are passed off as noble metal. To avoid falling into the trap of scammers, use these tips:

1. Before visiting a store or pawnshop, stock up on a magnifying glass. It will help you better see the mark on the product. This aurum must be marked with the Assay Supervision Inspectorate indicating the sample. Gilded items do not have a hallmark or receive a base metal marker.
2. Pay attention to the edges of the jewelry: gilding is a thin gold coating on an item made of any metal. It tends to wear off over time. If the color is uneven, then the item is not completely gold.
3. Stock up on a magnet. 24 carat metal is diamagnetic and will not attract. But the impurities may include alloys that are attracted by a magnet.
4. Each ingot must have a certificate and passport.

You can have your metal checked without leaving the store. The main thing is not to damage precious products!

Next, we suggest watching an interesting video about how you can check gold for authenticity at home:

What to consider when purchasing products

Commemorative badges, medals, precious coins, and bank gold bars are made from gold of the highest standard.

Au 24 carat is a heavy metal. The weight of the products is at least 10 grams. Accordingly, the cost of a small product will be high. Pure gold jewelry is rare. Mostly, jewelers make massive wedding rings: thanks to their volume, they will retain their shape.

The surface of the product is easy to scratch, so the jewelry should be stored carefully.