According to global analysts, the price of gold will continue to soar. Although 2020 has already seen historically high prices per ounce, the best is yet to come. A real "gold rush" has arrived. Not only large investors are turning to gold and other precious metals, but also anyone who wants to protect their money from losing its value.
The COVID-19 pandemic, lockdown, restrictions. All of this contributes to the poor condition of global economies and the artificial pumping of paper money into circulation. The result? Inflation and a downward trend in currency values. This is where precious metals come in, emerging from their niche and becoming increasingly popular among large, medium, and small investors alike.
The US Federal Reserve has a very liberal approach to inflation, which is causing the dollar to lose value. A direct consequence of this is that gold is becoming more attractive to investors than paper money. An example of this trend is Warren Buffett, who until now could definitely not be considered an enthusiast of the yellow metal. Just a few years ago, the investor said that gold was just a "trinket" and a kind of insurance policy against fear. However, Berkshire Hathaway (BRK) recently purchased shares in a gold mine and simultaneously sold shares in American banks. This move is a consequence of the COVID-19 pandemic, lockdown, and inflation. Doesn't this extraordinary behavior give us pause for thought?
GOLD MORE RELIABLE THAN THE DOLLAR
The dollar is steadily losing value, which is affecting the price of gold and silver. Admittedly, the last few days on the precious metals market have seen a correction in prices. However, this does not mean that the bull market is over. Analysts, banks, and other financial institutions agree in their forecasts – the price of gold will continue to rise. It is also worth paying attention to silver, which is still somewhat marginalized compared to gold. In recent days, the price of silver has reached this year's highs (USD 29/OZ).
DEMAND OUTSTRIPPED SUPPLY
Investors decided to flee to gold, silver, platinum, palladium, and diamonds. As a result, demand for precious metals exceeded supply until recently. Today, the situation is much more stable, but we do not know what autumn will bring and whether we will face further logistical restrictions related to the coronavirus, which would directly translate into a smaller amount of gold and precious metals on the market. Incidentally, it is worth noting that, as in other industries, the e-commerce market for precious metals has grown strongly during the pandemic.
COVID-19 has devastated developing economies and slammed the brakes on developed ones. Today, we are waiting for the time when we will be able to look back on all this in the rearview mirrors of our cars. But before that happens, we must not allow the pandemic to ruin our investment portfolios as well.
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