For an harmless and reasonably enticing steel, gold actually manages to fire up loads of debate.

We will all agree the yellow steel’s had a incredible 12 months, hitting new record highs above US$2,063 per ounce on 6 August.

On 11 December final 12 months, an oz of gold was value US$1,474. At present that very same ounce is value US$1,838. Whereas that’s down from the 6 August all-time highs, gold buyers have nonetheless banked a 25% acquire just by proudly owning bullion for the previous 12 months. Related positive factors have been delivered for buyers holding gold-backed exchange traded funds (ETFs).

As you’d count on, most ASX gold shares rode the rally in gold costs, recording larger share costs.

However that’s the 12 months behind. The one we are able to all agree on.

The new debate now’s what’s going to 2021 deliver for gold costs…and ASX gold shares?

Gold bulls

Daniel Pavilonis, senior market strategist at RJO Futures, is decidedly bullish on gold. Because the Australian Financial Review stories, Pavilonis says:

We aren’t too far-off from the highs, and as soon as we begin getting stimulus or a clearer image of how that is all going to play out, gold and silver will proceed to maneuver larger.

Pavilonis is way from alone in his bullish outlook for bullion.

In keeping with Livewire, Regal Funds Administration CIO Philip King, sees “much more upside than draw back within the gold value”. He additionally believes that, as buyers eye the restoration commerce, the latest sell-off within the gold value and main gold shares is opening up some good alternatives.

His fund holds various ASX gold shares together with Saracen Mineral Holdings Restricted (ASX: SAR) and De Gray Mining Restricted (ASX: DEG).

The De Gray Mining share value is up an eye-popping 1,950% since 2 January. (No, that’s not a typo.) De Gray shares reached an all time excessive of $1.55 on 18 September. Since then, the De Gray share value has fallen by 34%.

The Saracen Mineral share value has additionally dropped just lately, down 26% since 9 November. Regardless of that retracement, Saracen shares are nonetheless up 39% 12 months up to now.

For comparability, the broader S&P/ASX 200 Index (ASX: XJO) is down 0.3% thus far in 2020.

Gold bears

However not everybody agrees that gold will maintain onto its shine in 2021 and past.

Like JPMorgan Chase & Co (NYSE: JPM).

As Bloomberg stories, JP Morgan forecasts that the rising recognition and value of cryptocurrencies like bitcoin will see much less cash invested in gold.

JPMorgan strategists, together with Nikolaos Panigirtzoglou, wrote:

The adoption of bitcoin by institutional buyers has solely begun, whereas for gold its adoption by institutional buyers may be very superior… If this medium to long run thesis proves proper, the value of gold would endure from a structural stream headwind over the approaching years.

The financial institution famous that, whereas within the brief time period bitcoin could also be due for a correction and gold due for a elevate, it’s bearish on gold long run.

In keeping with JPMorgan, the Grayscale Bitcoin Belief has seen inflows of virtually US$2 billion (AU$2.7 billion) since October. As for gold-backed ETFs? They’ve seen outflows of US$7 billion.

It’s “only a guess”

Having heard from each the gold bulls and gold bears, we flip to Shane Oliver, the pinnacle of funding technique and economics and chief economist at AMP Capital, a subsidiary of AMP Ltd (ASX: AMP).

Talking at AMP’s webinar on Wednesday, Oliver stated whereas he believes the returns from gold subsequent 12 months will probably be constructive, it’s actually anybody’s guess:

Like with bitcoin, I believe gold will in all probability go up. It’s simply that I believe there are essentially sounder methods to play a worldwide restoration than gold or bitcoin. By way of extra conventional industrial commodities or by way of share markets… Attempting to challenge the returns [from gold or bitcoin] is only a guess. It might double in worth, but it surely might additionally halve in worth.

With Shane Oliver’s phrases in thoughts, investing in ASX gold shares carries a good quantity of threat, and the share costs of gold shares are typically volatile.

After all, with year-to-date share value positive factors just like the 1,950% delivered by De Gray Mining, some buyers will probably be keen to abdomen that volatility and threat in hopes of one other outperforming 12 months for gold.