Gold has been a source of fascination across various cultures. More importantly, gold is a store of wealth meaning that when all else fails and the economy reaches rock bottom, gold will still remain valuable. In 2019, some people could not see the price of gold hitting $1,500 let alone $2,000 and everyone who thought otherwise was regarded as being over optimistic. We expected Brexit and the upcoming U.S elections to push demand and prices up but no one could have foreseen a global pandemic breaking out. And now here we are, marveling at how quickly the price has rallied. Economists are now predicting the price to go beyond $2,000 and judging by what has happened so far, and the growing deaths in countries like the U.S and the resurgence of the virus in China and other countries, $2,000 an ounce is a highly likely possibility.
Right now the price of gold bullion has reached an all-time 8-Year high! Bullion that is supposed to be delivered in August rose by as much as 1.3% to hit $1,804 on the Comex in New York. That is the highest since November 2011. If there ever was the best time to sell gold, this would be it.
With the coronavirus infections not showing signs of abating and the death toll rising, investors have resorted to gold as insurance. Experts tell us, we are nowhere near the end and they also tell us that although there are clinical trials for a vaccine and a cure, we should expect to live with this virus for another year or two. In the meantime, companies are being forced to shut down which means a lot of people will lose their jobs. This means that more people will sell gold jewellery they have to make it through this tough time.
A lot of governments have taken up the challenge to help ordinary people by offering more social welfare grants. This is different to how they reacted in the 2008 financial crisis when they bailed out big banks but neglected to bail out small enterprises and ordinary people who found themselves out of a job. “We have to adjust to this new normal” but some people will have a hard time making ends meet – this is where gold comes in handy. More people are selling their gold jewellery and their bullion to get through this crisis.
With the Corona virus pandemic, millions of people are running to gold, whether it’s Investment grade bullion bars or gold jewellery, people are running to gold as insurance against the inevitable economic fallout. Inflation is already up by 20% but with the Coronavirus Pandemic and the measures that governments have had to take, the gold price is bound to skyrocket. The economic recovery will depend on the sustained and effective containment of the virus. But there are still geopolitical pressures that can affect the price of gold including the impending U.S elections and also the tension brought on by the Chinese President Xi Xinping’s clamp down on dissidents.
Looking at the future and what it may hold, people who have invested in gold or anyone who has kept gold jewellery all this while might be able to get out from under mounting debt by selling.