According to CNBC, gold received green light for growth. According to John Davy, founder and manager of Astoria Portfolio Advisors, there are three main reasons why the price of gold has shown a notable increase over the past few months.
“One of the drivers of rising gold prices is the growing risk of a recession in the US economy. The second important support factor for precious metals is the Fed's interest rates, which will soon decline, ”the expert said in an interview with CNBC. "The third reason is to reduce the yield on 10-year US government bonds from 1.2% by 25 basis points."
All three of these factors make ownership of physical gold justifiable and cost effective. “In general, I don’t think that owning gold will be more expensive if the Fed's interest rates go down,” the expert shared his opinion.
In his opinion, “it is best to pursue the diversification of the investment portfolio. You need to have several assets in it. Since 2009, the S&P 500 index has grown by + 400%, while gold has grown during this time by + 50%. At the same time, the shares of the GDX fund investing in gold mining fell by -10%. Therefore, you need to buy assets with the optimal ratio of risk and return. "