Amidst market volatility and evolving global financial strategies, gold remains a compelling asset. Max Baklaian, CEO of Tavex, recently shared his insights on Bloomberg TV Bulgaria, suggesting that the upward trajectory of gold prices is far from over.”There is no reason for the investment sentiment around the gold to change and to see a permanent decline, and in contrast – its price will grow rather,” Baklaian stated, reinforcing the potential for continued growth in gold’s value.

Baklaian addressed the temporary dip in gold prices observed during market crashes. He explained this phenomenon as a strategic move by investors to liquidate their most liquid assets, like gold, to cover losses in other parts of their portfolios. This short-term sell-off, however, doesn’t negate the overall positive outlook for gold.

Indeed, gold’s performance in 2024 has been remarkable. “The analyst recalled that the price of gold has reached 21 consecutive records this year, which is more than 2024, which has been one of the best years for the metal.” This impressive run underscores the strong investor interest in gold as a safe-haven asset.

Central Banks Re-Embrace Gold

A significant factor driving gold’s resurgence is the renewed interest from central banks. Baklaian noted, “The interest in investment gold is very high, as the whole system has been duty. Central banks are fully aware of this and return the gold as an asset class one.” This shift in attitude marks a departure from the past, where gold was sometimes viewed with skepticism by financial institutions.

The current reassessment of gold reserves and audits, according to Baklaian, signals a strategic recognition of gold’s potential to bolster financial stability, notably in the U.S. “It is no coincidence that the gold reserves are being reassessed and the audit of the gold reserves,” he emphasized. This move aligns with a broader trend of nations seeking to diversify their holdings and reduce reliance on the U.S. dollar, a strategy known as de-dollarization. China, for example, has been steadily increasing its gold reserves in recent years, viewing it as a hedge against potential economic uncertainties and geopolitical risks.

the interest in investment gold is very high, as the whole system has been duty. Central banks are fully aware of this and return the gold as an asset class one.

Max Baklaian,CEO of Tavex

A Bullish Market Rooted in Economic Uncertainty

Baklaian traced the current bullish market for gold back to the beginning of the COVID-19 pandemic. “In my opinion, this bullish market starts from the beginning of Covid Pandemia. The gold was then $ 1590 a tiny.To date, its price is almost double… I don’t think the price of gold will only go up twice. I believe there is a lot,many times up,” he predicted.

This prediction is rooted in the ongoing economic uncertainties, including inflation, geopolitical tensions, and concerns about the stability of the global financial system. These factors drive investors to seek safe-haven assets like gold,which has historically maintained its value during times of crisis. The U.S. is not immune to these global trends. Rising inflation rates in the U.S.,for example,often lead investors to consider gold as a hedge against the erosion of purchasing power.

Gold vs. Bonds: A Paradigm Shift

Typically, high interest rates favor bonds over gold, but the current economic climate presents a different scenario. “Traditionally, investors prefer bonds over traditional metal in high interest rates.This time, however, the situation seems different,” Baklaian explained.

He suggested that interest rates would need to exceed 4% to make bonds more attractive than gold. Furthermore, he pointed to the global trend of major bondholders selling off U.S. debt in favor of allocating capital to gold. this shift indicates a growing preference for the stability and perceived safety of gold over traditional bonds, particularly as concerns about U.S. debt levels continue to rise.

The U.S. national debt, which surpassed $34 trillion in early 2024, is a growing concern for investors. As the debt burden increases, the perceived risk associated with U.S. Treasury bonds may also rise, making gold a more appealing alternative.

Investment Strategies and Practical Applications

For U.S. investors, Baklaian’s insights offer valuable considerations for portfolio diversification. Incorporating gold into an investment strategy can provide a hedge against inflation, economic downturns, and geopolitical risks. However, it’s crucial to approach gold investments with a balanced perspective and consider individual risk tolerance and financial goals.

Several avenues are available for U.S. investors interested in adding gold to their portfolios:

• Physical Gold: Purchasing gold bullion (bars or coins) offers direct ownership of the asset. However, storage and insurance costs should be factored in.
• Gold ETFs: Exchange-Traded funds (ETFs) provide a convenient way to invest in gold without physically owning it. These ETFs track the price of gold and are traded on stock exchanges.
• Gold Mining Stocks: Investing in companies involved in gold mining can offer exposure to the gold market. However, the performance of these stocks is also influenced by factors specific to the mining industry.

It’s essential to consult with a qualified financial advisor to determine the most suitable gold investment strategy based on individual circumstances.

Potential Counterarguments and Considerations

While the outlook for gold appears promising, it’s important to acknowledge potential counterarguments. Rising interest rates, if they substantially exceed 4%, could indeed make bonds more attractive. Furthermore,a strong and sustained economic recovery could reduce the demand for safe-haven assets like gold.

Additionally, fluctuations in the U.S. dollar’s value can impact gold prices.A stronger dollar typically puts downward pressure on gold prices, while a weaker dollar can provide a boost.

Thus, investors should carefully monitor these factors and adjust their investment strategies accordingly.

Conclusion

Max Baklaian’s analysis suggests that gold’s upward trajectory is highly likely to continue, driven by factors such as central bank demand, economic uncertainties, and a shift in investor preferences. While potential counterarguments exist, the overall outlook for gold remains positive, making it a compelling asset for U.S. investors seeking to diversify their portfolios and hedge against various economic risks.