Gold Prices Stand at Record-High Levels & There’s a Gold Rush in the Making
Gold prices stand at their highest level ever recorded, above $1,950 at the moment. But the precious metal still looks attractive. I can’t stress this enough: if you are ignoring gold, you could be making a big mistake.
You see, gold is a hedge against currency devaluation, uncertainty, and volatility.
Right now, we are seeing a lot of currency devaluation, uncertainty, and volatility around the world. So gold is becoming a place where investors are rushing to, and it’s giving a boost to gold prices.
It wouldn’t be wrong to say we currently have a new gold rush in the making.
Consider the inflows at gold-backed exchange-traded funds (ETFs) globally. Year-to-date, ETFs have seen inflows of close to 890 tonnes of the yellow metal, up by about 29% year-over-year. (Source: “Global Gold-Backed ETF Holdings and Flows,” World Gold Council, last accessed July 28, 2020.)
But don’t just stop at ETFs. Look at the gold bullion sales at mints around the world; they have been skyrocketing.
In 2019, the U.S. Mint sold 152,000 ounces of gold in American Eagle coins. Year-to-date in 2020, the mint has already sold 471,500 ounces of gold in American Eagle coins. (Source: “Bullion Sales,” U.S. Mint, last accessed July 28, 2020.)
Simple math here: gold coin demand at the U.S. mint in 2020 has already surpassed the 2019 figures, and is currently running at more than 200% above that entire year’s figure.
The Big Question
Now the big question: will this demand end any time soon?
Here’s the thing, at the moment, there’s very little light at the end of the tunnel for the economy. Don’t look at the stock market; it’s creating an illusion that says everything is great. But the reality is dire. Uncertainty, devaluation, and volatility will be with us for a very long time.
And here’s another question: if the Federal Reserve stops printing money and raises interest rates, could the U.S. economy survive on its own? It is very unlikely. We will see an outright depression if the Fed doesn’t support the economy.
Know that the pandemic is still a thing. Surely, there’s a lot of noise about vaccines coming out soon, but the “soon” isn’t until (with most optimistic estimates) at least the end of 2020. This could trigger much bigger issues that are currently overlooked.
Lastly, the global economy is in a lot of trouble. It was already slowing down before the COVID-19 pandemic began. The pandemic just caused further slowdown.
Here’s what you need to know: as economies slow down, expect the central banks of those countries to use all the weapons in their arsenal to revive their economies. And the biggest weapons that central banks have these days is creating money out of thin air and keeping interest rates low.
Why $2,500 Gold Could Be Ahead Sooner Rather Than Later
Dear reader, anyone who says gold doesn’t provide any safety hasn’t really looked at the precious metal from a long-term perspective.
At the moment, there’s a gold rush and investors are rushing to hedge themselves.
I liked gold at $1,050 when no one wanted to look at it. I also like gold at $1,950 because it’s still relevant and does what it has been doing for a very long time.
I see more upside with gold prices. I wouldn’t be shocked to see $2,500 gold much sooner than expected.