Investment and savings: gold becomes a winner in early 2023

There is a popular saying that “money grows on the tree of patience”. In Argentina, there is no context for patience. Inflation devours the value of money faster and faster. Everything is frugal and fleeting in terms of decisions to preserve value and earn returns. Saving and investing that take time are increasingly difficult to put into practice.

What are the differences between saving and investing? He economy It is the part of the income that is not used in consumption so that it is then kept for the future. There investment It is the process by which income from savings is allocated to the purchase of assets in order to meet future needs. Both stocks aim to avoid losing to the scourge of inflation.

Between January 2022 and January 2023, compared to a line inflation of 98.8%, the CDD yields 75%; gold, 95%; the free dollar, 86%, the CCL dollar, 83%; and the MEP, 80%. Of the 5 options chosen, gold is the closest to inflation. However, only fixed-term UVAs over the same period beat inflation with 98.9%. It is important to remember that this last instrument always tries to beat inflation by one percentage point, but has its direct counterpart in the time that pesos must be deposited in the bank. For 3 months, it gives an inflation-adjusted rate, but the money must be tied up in the bank.

However, in the face of inflation which gives 6% to the consumer price index, it becomes convenient again to invest in the traditional fixed line which yields 6.25% per month.

If we take December 2022 as a parameter, we will see how the last jump in the exchange rate made the parallel dollar the best choice to face inflation with a return of 11%. It is then closely followed by the latest rise in gold with 8%, the dollar CCL with 6% and the fixed term with 6.25% (encouraging data, since months ago those who bet on this instrument were historically below the price change).

If the analysis of these instruments is dragged to January 2023, we will see that the winning investment is gold with 12%, contrasting with the inflation data of 6% for the first month of the year. According to the Swiss investment bank UBS, there is a rebound in metal prices and they estimate that it will increase by 13% this year. The firm predicts that an ounce of gold will be located throughout 2023 and much of 2024 at $1,900.

Finally, in this tangled economy, we will see that in the first week of February 2023, the same valued assets underwent another change. The winner as a winning investment was CDD UVA with 1.6% but very close to traditional CDD with 1.53%, dollar MEP with 0.97%. For those who invested their income in digital wallet liquidity funds, they had a return of a rate of 0.27%. In the first week, those who invested in free dollars or CCL had negative returns of -1.81% and -1.52%, respectively. The market is forecasting inflation for the month of February that would be around 5.5%.

This very short-term course shows how, depending on the vagaries of the economy, the choice of assets to protect against inflation evolves. However, there is no clear trend as to which asset to consider over time. Benjamin Grahamconsidered the father of Value investing (Value Investing), an investment strategy he began teaching at Columbia Business School, said the investor’s “biggest problem, and even his worst enemy, is probably himself.” For an Argentinian, the main investor problem has as its worst enemy a State which, government after government, has deteriorated our currency, generating the conditions for rising inflation as a mechanism for liquefying the budget deficit and financing its deficit, increasing the tax burden and giving it no legal, political and economic predictability.

In our country, the dynamics of permanent change are almost weekly and sometimes daily in terms of the predictability of savings and investment decisions. This means that the decision made today is not the best tomorrow. the american investor Seth Klarman He said that “success in investing cannot be explained in a mathematical equation or in a computer program, it is an art”.

At a time when algorithmically programmed robots try to project the best investments and when technical analysis in terms of investing abounds everywhere, perhaps Argentinians are enhanced by a new global “art”: how to invest and save with inflation and come out equal or winning in the attempt?