Golden January 2023
Wojciech R. Bolanowski, MD PhD
Chief AI Officer, retail and digital banking, payments and fintech in EU, GCC, SEA, enthusiast of cross-border banking
In January the price of gold ounce went up by 100$ (ca. 5.5%). Gold is worth more now than it was before Russia invaded Ukraine. Although cryptocurrency market showed strong signs of recovery, yet it is still almost 40% down comparing with the outbreak of the war in February 2022. Last month was truly a month of gold and the yellow metal proved its resilience and ability to protect wealth during uncertain, turbulent times we are experiencing.
Gold climbed up, exceeding pre-war level
With the price for ounce ca. 1930 USD gold sits currently much higher than it did just before the outbreak of the war in Ukraine. At the beginning of February 2022 1 oz of the shiny asset was worth around 1800-1850 American dollars. It jumped rapidly at the onset of Russian invasion. It created impression that gold, as usual, would be a safe haven for the turbulent time of the war. Bitcoin showed even more strength and the question was whether traditional, metallic assets or digital, decentralized ones would be the better option for wealth protection (my first report on the issue is already ten months’ old: ?Euro, Bitcoin, old good gold, and the war in Ukraine”). Soon it appeared that the best option was American Dollar for all other assets lost their value during the next months of war. In January 2023 alone the price of golden ounce jumped by hundred dollars
Gold – the best investment for turbulent times
As soon as in July I asked curiously: Seven months of the war - why gold has become as weak as Euro? Now, after eleven months of the war the situation clarified much. Gold has recovered from its wartime losses and is very likely to climb even higher. In January 2023 alone the price of golden ounce jumped by hundred dollars (or 5.6%). One ounce was valuated more than today only twice in the whole period of the war: at the beginning of March and in mid-April of 2022.
Euro is trying hard, but has not fully recovered
Also Euro has been enjoying the upward ride since end of September last year. Yet, it is less efficient than gold, still being valued less than its pre-war pricing. With EUR:USD ratio under 1.09 Eurozone currency is still cheaper than in April 2022. The trend is quite obvious: all assets covered by my monitoring are gaining against American Dollar. Gold is more successful than Euro and Polish Z?oty. Both European currencies have been growing for more than four months already. Bitcoin, however, has been very mercurial and volatile recently. The strong performance of Euro comparing to the digital assets is linked to the general trend of FX markets, which currently express less optimistic sentiment toward US Dollar. Financial markets are far from unconditional appreciation of American currency since FED became more pro-active in their monetary policies, and the mixed signal from real economy suggests possible change in FED’s approach over time.
Cryptocurrencies: hope for better
Many investors, specifically those who have actually invested in cryptocurrencies hope that the worst already happened. So called #cryptowinter is going to end at the same time the winter season ends (on Northern Hemisphere).; I don’t know whether they are rioght or wrong, but markets look favorable for Bitcoin this year. The current growth phase started four weeks ago. Since then Bitcoin has grown by almost 40% - from USD 16.5 thousand to 23 thousand. Eventually, the asset reached the level it was at half a year ago. Still, since the beginning of the war Bitcoin has lost more than one third of its value. Generally, the price remains in the horizontal channel between 15 and 25 thousand USD as it has been since last summer #cryptocrash. The last few weeks of better performance are not necessary the beginning of longer term growth.
January was a golden month
January was a month of gold, the assets refreshed its image as an effective safe haven, protecting wealth during turbulent times. Although Bitcoin is the undisputed champion of the month, however gold is winning in long term. It is the only asset worth more today than at the outbreak of the war. In January the price of gold increased by 5.6% and fully compensated for war losses. The details are given in the table below which presents monthly performance of the selected assets during the war, that is since Fabruary 24, 2022. Please note that for the purpose of gold performance monitoring the average market price of gold ounce is used.
Average prices of selected assets in US Dollars, the average market price for 00:00 UTC of specific days; data source: xe.com charts.
The monthly briefings about asset performance since the beginning of the war are available here:
Summary of January 24th:
Summary of December 24th:
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Summary of November 24th:
Summary of October 24th:
Summary of September 24th:
Summary of August 24th:
Summary of July 24th:
Summary of June 24th:
Summary of May 24th:
Summary of April 24th:
Summary of March 24th: