Can You Buy Gold in a Bear Market? Expectations What?

The precious metal, often labeled as ‘inflation protection’ and known as a ‘safe haven’, looks dull. Gold is down 23% from its March peak and 10% since the start of the year. ‘What to do in a bear market?’ Experts explain the question and whether it is worth keeping gold in this environment. We have prepared the experts’ gold comments and predictions for our readers.

Gold comments and advice from experts

Why hasn’t gold performed better this year?

In order to control the inflation monster, central banks began to tighten their policies. In particular, the Fed responded to historically high inflation with aggressive rate hikes. cryptocoin.comAs you can follow, gold prices fell with the pressure of high interest rates and strong dollar. City Index market analyst Fawad Razaqzada made the following statement:

First, major central banks around the world tightened their policies. This, in turn, helped send bond yields to multi-year highs. Yield-seeking investors stayed away from zero-yielding assets like gold. Instead, they chose to hold government bonds to get guaranteed returns.

The second reason, according to Razaqzada, is the strengthening US dollar. Because it put heavy pressure on almost all major monetary assets, including gold. That’s why buyers who earn in foreign currency have to pay more, the analyst says. For this reason, he notes that they are discouraged to invest in gold.

Should investors keep gold in their portfolios, and if so how much?

This is where fund managers and strategists really differ. Gold comments from Jay Hatfield, the InfraCap Equity Income Fund (ICAP) ETF portfolio manager:

We do not recommend a fixed allocation to gold unless investors want to speculate on currency rates or have another short-term bullish momentum that could cause gold to appreciate.

Rob Haworth, senior investment strategist in US bank wealth management, offers the following general advice:

Given the price volatility and consistent income stream, portfolios should have little or no permanent gold or metal exposure. If investors are particularly concerned about a reversal in the value of the US dollar, which could further reduce inflation pressures and support gold prices, they may consider very modest risks.

The gold comments of Imaru Casanova, VanEck deputy portfolio manager/senior gold analyst, are as follows:

In general, each investor’s situation is unique. However, we consider an allocation of 3-5% to gold products is large enough. We also recommend this to capture the benefits of holding gold as an asset class.

Mohit Bajaj of WallachBech Capital explains on the portfolio allocation:

I’ve always been a big advocate of diversifying risk across any asset class. Anywhere between 5-10% for gold is more than enough.

Physical gold or paper gold?

Which is better for traders looking to hold the yellow metal? Physical gold or paper gold (investments that cover gold ETFs)? Louis Navellier, founder and chief investment officer of Navellier & Associates, does not recommend physical gold. But he says he has a clue for those who insist on keeping it. He explains it this way:

The coins have a great valuation. For this reason, Credit Suisse bars are often sold at a lower valuation.

As for ETFs, Navellier says, “I don’t recommend gold ETFs as I don’t like paying ETF spreads.” But WallachBech’s Bajaj recommends SPDR Gold Shares (GLD) “if you want to access gold without having to physically buy the metal.” GraniteShares Gold Trust (BAR) is “another company we see very strong demand for,” Bajaj says.

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