Gold is currently trading around $1,800.00. Trading near 8-year highs. Investors are piling into gold as fiscal and monetary policy continues to take debt to unprecedented levels.
Gold has always been traditionally a safe investment and a hedge against inflation. It has maintained its reputation during one of the worst economic downturns in history. Previously, most gold buyers, however, have come from China and India, two of the countries that have helped boost gold prices for almost a decade. Due to the pandemic, these countries are no longer making such large investments. China’s gold purchases are expected to drop by 23 percent. India, a country where even the poor own gold for jewelry, will likely purchase 36 percent less gold in 2020. The sky-high prices, which are still rising, have deterred many buyers from the more traditional gold-buying countries, whose economies are still suffering from lockdowns.
Of course, should China and India return to their old gold-buying habits, the price will soar way past previous record highs. In the meantime, both US and European investors are buying gold as quickly as they can to preserve their wealth.
The price of gold has increased by 17 percent since the pandemic and is up 28 percent from a year ago, while the value of the dollar has dropped by 3 percent. Gold companies are experiencing a 50 percent profit over a year ago. For anyone wishing to come out on the right side of this pandemic, purchasing gold makes sense, as fiat currencies continue to lose value rapidly against gold as debt levels continue to skyrocket.
GOLD VS FIAT CURRENCIES THE PAST 6 MONTHS:
🇺🇸 = +15%
🇨🇦 = +19%
🇦🇺 = +13%
🇨🇭 = +12%
🇨🇳 = +17%
🇨🇴 = +25%
🇪🇺 = +12%
🇲🇽 = +37%
GOLD IS MONEY, EVERYTHING ELSE IS CREDIT… pic.twitter.com/bkwej6JPrJ
— Gold Telegraph ✪ (@GoldTelegraph_) July 17, 2020
The question is, how will gold act in the future? The rising price of the metal during the pandemic has been due to its traditional nature as a safeguard against inflation and the destruction of fiat currency. In 2020, buyers have purchased $33.7 billion worth of gold, which is the largest gold purchase for such a short period.
At this time, the government is struggling with surging debt, plummeting bond yields, and a questionable economic future. At the end of the first quarter of 2020, the U.S. debt increased beyond $26 trillion. That number encompasses 120 percent of the total U.S. economy. These problems will take time to resolve, providing an opportunity for gold prices to rise even beyond $1,800.00. Topping the $1,800.00 barrier has broken through a great deal of psychological resistance, and the question now should be not will the price of gold continue to rise, but how high will it go? Morgan Stanley and Citigroup are predicting that the price of gold will reach $2,000 within a year.
During the first two quarters of 2020, gold has outperformed all other commodities.