Last year was undoubtedly characterized by volatility. There were opportunities for significant gains as well as losses. Many predictions made at the beginning of 2023 did not materialize. Markets, adapted to the geopolitical situation, were again surprised by a conflict – this time – in the Middle East. By the end of the year, we also saw a test of the record level of $2100 for gold. But let’s not forget about AI and other assets. How was this year and what awaits us in 2024? Explain the experts of Tavex.
Gold shining from the shadows
In 2023, a certain weakness was observed in the gold market. Turnover of precious metals dealers in Poland and other European countries, especially in Germany, was lower than in the record year 2022. One of the reasons for this weakness was the rise in interest rates, which reduced the availability of free capital in the market. Rising loan rates and inflation had a negative impact on investors’ portfolios, who had to shift some of the free funds to patch up holes in household budgets. Nevertheless, the price of gold still remained – and remains – at a high level.
In December 2023, the psychological barrier of $2100 per ounce of gold was broken, and the year ended with the asset nearly 14% up. All of this assures us that gold is doing really well, although it’s worth noting that these records were not broken in prices expressed in PLN. This was due to the strengthening of the Polish currency, resulting from various factors such as elections, inflow of money from the National Recovery Plan and relatively high nominal interest rates in Poland. Gold is still considered an effective protection of funds against inflation. According to the latest Tavex study, 13% of investors have invested their savings in this metal.
Poles see gold as a good investment choice, even though they have concerns, mostly linked to a lack of understanding of this asset. The most popular gold investment products in 2023 were ounce bullion coins. Next, we invested in bars of various weights, historical coins, and premium coins. Notably, interest in fractional coins, such as half ounces or quarter ounces, increased in 2023. This is due to the better availability and flexibility of these products, which allow investors to consistently bet on gold – points out Aleksander Pawlak, CEO of Tavex.
Despite many skeptics, not only individual clients invested in gold, but also some of the biggest players, including central banks. It’s worth noting that the National Bank of Poland had a significant share in this sector, being the second largest buyer of gold in the world in 2023, only surpassed by the People’s Bank of China.
Artificial Intelligence, Bitcoin – what’s happening with others?
Last year, the world was conquered by artificial intelligence, which quietly found its way into our homes, as well as into investor consciousness. The technology index Nasdaq performed best among American indices, producing a return of about 50%.
Although the AI bull market is, of course, undeniable and nobody knows where its peak will fall, with such strong growth and, above all, unmistakably positive narrative in financial media, I would be very cautious at these levels. Over the past dozen years or so, the positioning of technology and AI asset managers has also changed significantly, and is now at record levels. It seems to have gotten a bit crowded here – emphasizes Tomasz Gessner, chief analyst at Tavex.
What happened to Bitcoin, which caused tremendous emotions in 2022? Last year, it outclassed everyone, growing by over 126% in PLN. As always, the higher the expected rate of return, the more risk and volatility is involved. Last year showed this very clearly with Bitcoin, but those who got involved in the most famous cryptocurrency have a lot of reasons to be satisfied this time.
What awaits us in 2024?
There is no clear answer to this question. As can be seen in 2023, predictions can change multiple times. So the question should rather be – what is worth watching?
The key issue in the global economy will be observing whether there will be a “hard” or “soft” economic landing across the ocean. The “hard landing” scenario implies a swift drop in inflation, a significant deterioration of economic growth and the job market, which can negatively impact the stock market, particularly in the tech sector. On the other hand, a “soft landing” scenario with moderate economic growth, job market stability and controlled inflation can favour stock markets, a weaker dollar and a rise in the value of gold and other commodities.
Additionally, the rising US debt, which has surpassed 34 trillion USD and represents 122% of GDP, becomes a key factor influencing the decisions of the Federal Reserve, especially in the context of upcoming elections and the need to refinance a significant part of this debt.
