As cryptocurrency enthusiasts continue to hail Bitcoin as the new “digital gold,” traditional investors are not ready to overlook the enduring value of the yellow metal. Despite the growing excitement surrounding Bitcoin and other digital currencies, gold remains a favored investment, particularly in light of potential economic shifts and political developments in the United States. With analysts predicting a steady increase in gold prices, the precious metal continues to draw significant attention as a reliable hedge against inflation and geopolitical uncertainty.
Gold’s Strong Market Return Post-Election
Gold’s appeal as a safe haven for investors has only strengthened in the wake of the recent U.S. presidential election. After an initial dip following the election results, the price of gold quickly rebounded and has remained robust, hovering near US$2700 per ounce. This surge comes as no surprise to experts like Will Rhind, CEO of GraniteShares, a global issuer of ETFs specializing in precious metals, tech, and crypto. Rhind sees gold’s performance as an inevitable outcome of broader macroeconomic trends.
“The U.S. presidential election had a winner weeks before the ballots were counted—and that was gold,” Rhind stated, highlighting that both candidates’ campaigns involved promises of increased liquidity and growing government debt. This environment, he believes, bodes well for gold prices. According to Rhind, the combination of expanded fiscal policies and increased liquidity historically correlates with higher gold prices. As global debt rises, investors are increasingly turning to gold as a hedge against economic uncertainty.
Economic Policies and Gold’s Bright Future
Rhind’s outlook for gold remains positive, especially with the potential for more inflationary policies and future rate cuts under a second Trump administration. These factors, he suggests, will reduce the opportunity cost of holding gold, making the precious metal even more attractive to investors. With central banks around the world accumulating reserves and diversifying into gold, the momentum for the metal’s continued growth is expected to remain strong.
“In a time of rising government debt and global liquidity expansion, we have seen gold reach all-time highs,” Rhind observed. “This trend is expected to continue as investors seek reliable stores of value.”
Central Banks’ Role in Gold’s Continued Strength
Rhind also emphasized the growing role of central banks in supporting gold’s price. Over the years, central banks have been adding gold to their reserves as a diversification strategy. This trend is expected to continue, further supporting the price of gold. The diversification away from U.S. dollar reserves, particularly in the wake of geopolitical tensions, is one of the key drivers of the current gold rally.
“The central banks have been a significant tailwind for gold prices. As governments look to hedge against inflation and currency debasement, gold continues to attract investment,” Rhind explained.
GraniteShares Partners with Moomoo Australia
In an exciting development for Australian investors, GraniteShares has partnered with Moomoo Australia, offering Australian retail investors direct access to the innovative portfolio of GraniteShares ETFs, including those focused on gold and other commodities. Rhind’s vision is to provide more accessible, cost-effective, and transparent investment options to a wider audience, leveraging Moomoo’s trading platform to reach more investors.
“As an entrepreneurial ETF provider, we are always looking for ways to offer better investment options to our clients,” Rhind said. “Moomoo shares our vision of delivering innovation in the trading space, and we look forward to a long and mutually beneficial partnership.”
Moomoo Australia’s Chief Commercial Officer, Michael McCarthy, echoed this sentiment, calling the partnership a significant opportunity for Moomoo users. He highlighted GraniteShares’ portfolio, which includes unique single-stock funds focused on companies like Apple, Nvidia, Amazon, and Tesla, in addition to traditional commodities like gold.
“Our partnership with GraniteShares is a great example of how we continue to innovate for our customers,” McCarthy stated. “Moomoo is committed to providing our users with a trading experience that goes beyond what is offered by other platforms.”
The “Debasement Trade” and Growing Demand for Gold
JPMorgan analysts have noted that the economic policies expected under a second Trump administration could further benefit both gold and Bitcoin. The concept of the “debasement trade” refers to the buying of assets, like gold, that are perceived to retain value when a currency weakens due to inflationary policies. With rising debt levels and uncertainty surrounding global currencies, both gold and Bitcoin are seen as stores of value.
In a report released following the U.S. election, JPMorgan pointed out that central bank purchases of gold had been rising, particularly in the wake of geopolitical instability in Eastern Europe. The investment bank also predicts that the ongoing trade tensions between the U.S. and China, under President Trump’s policies, will encourage China to further diversify its reserves away from U.S. dollars and into gold.
Australia’s Gold Miners Poised for Growth
David Franklyn, co-head of Argonaut Funds Management, believes that retail investors are mirroring the actions of central banks in their growing demand for gold. This shift is expected to benefit Australian gold miners, particularly with the Australian dollar’s gold price surpassing US$4000 per ounce.
“The demand for physical gold ETFs reflects a broader trend toward using gold as a store of value amid rising uncertainty,” Franklyn said. “This is great news for Australian gold miners, as the higher gold prices are likely to result in substantial free cash flow generation. However, this potential is not yet fully reflected in the market valuations of these companies.”
As global demand for gold continues to grow, Australian miners are well-positioned to capitalize on the rising price of gold, ensuring continued profitability in the coming years.
Gold’s Long-Term Potential in a Shifting Economy
As we move further into 2024 and beyond, gold remains an attractive investment, particularly in the face of economic policies expected to be implemented by President Trump’s administration. With inflationary pressures, rising government debt, and global liquidity expansion, gold is set to remain a key player in the financial markets. Central banks are expected to continue diversifying into gold, and investors will continue to seek the precious metal as a reliable hedge against economic uncertainty.
The growing recognition of gold as a safe haven asset is evident in the increased demand for physical gold, ETFs, and other gold-based investment products. In Australia, this trend is likely to benefit local gold miners, who stand to gain from higher gold prices and increased investor interest.
While Bitcoin and other cryptocurrencies continue to capture the public’s imagination as digital alternatives to gold, the enduring value of gold remains unmatched in times of economic instability. As both individual and institutional investors continue to seek reliable stores of value, gold’s role as a hedge against inflation and geopolitical risk is unlikely to diminish anytime soon.
As Goldman Sachs forecasts gold prices reaching US$3000 per ounce by the end of 2025, it is clear that gold’s appeal is not only enduring but growing. The precious metal’s combination of stability, historical significance, and ongoing demand makes it a cornerstone of many investment portfolios, regardless of the digital gold buzz.
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