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Summary

Gold in freefall: What's behind the sudden crash?

After weeks of record highs, gold and silver, especially gold, are experiencing a significant price decline. What are the reasons for this downward trend? We spoke with renowned financial expert Zsolt Janos to shed some light on the matter.

The reasons for the previous surge

Zsolt Janos explains that the previous price increases were due to several factors:

• Uncertainty regarding politics.
• A kind of escape from the dollar.
• Expectations for a continued loose interest rate policy.
• High liquidity in the market.

These factors led to a parabolic rise in prices, which, however, was not sustainable.

The correction: Healthy and overdue

The subsequent price crash, which peaked at gold 12-13% and even with silver 33% According to Zsolt Janos, the price increase is a healthy correction. He emphasizes that investors who bought gold a year ago are still well-off despite the decline. 75% are in positive territory (silver even more) 160%).

"We have seen abnormal developments across the entire precious metals market, and this correction we have now seen is actually healthy and long overdue."

Is now a good time to get started?

Whether now is a good time to buy gold depends on the investor's motivation. For those who view gold as a store of value, price is of secondary importance. Speculators, however, should be cautious and monitor further developments. It's important to note that there was no demand crash. The price drop was primarily triggered by leveraged derivative products.

Gold vs. Silver: Which is the better choice?

Zsolt Janos generally advises against holding money in fiat currencies like the euro or dollar for the long term. Instead, investors should focus on real assets such as gold, silver, and other commodities. He points out that commodity prices have lagged behind industrial and stock valuations in recent decades and that there is potential for long-term recovery.

Beware of paper gold

An important point is the distinction between physical gold and so-called paper gold products. Zsolt Janos warns against certificates and other financial products where the gold is not physically backed. In a crisis, this can lead to problems. Investors should always ask themselves whether they actually own the precious metal or only have a legal right to it.

The role of the dollar

A weaker dollar can boost exports in the short term, but leads to inflation in the long term. Furthermore, political decisions are undermining confidence in the dollar as a safe haven currency, making it more difficult to refinance American debt.

Conclusion: Strategic investment in precious metals remains a sensible option.

The current correction in the gold market may offer opportunities for long-term investors. However, it is important to understand the risks and pursue a well-thought-out investment strategy. Ensure physical backing and do not be guided by short-term speculation.

"It's always a good idea to start with a strategy and, above all, to build it up in such a way that when price movements like today's occur, you don't have to sell under pressure. That's the worst thing that can happen to an investor – selling solid stocks out of panic."

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