The price of gold has crossed a record high today (Monday, 2020-07-27) reaching 1945 $ an ounce as investors rushed to the safe-haven metal amid concerns about the resurgence of the coronavirus and its impact on the economy as well as rising geopolitical tensions between the two largest economies in the world: China and the USA. (closing of each other’s’ consulates in Houston and the city of Chengdu).
The Gold price reached 1945$ per ounce surpassing its previous record price of 1921$ per ounce from September 2011.
Gold started the year at a price of 1520$ per ounce and has increased more than 27% so far this year. Gold has been long known as a ‘safe haven’ asset, acting as an insurance during periods of financial turbulence or uncertain economic times. The price of gold in SEK reached 17 022 SEK per ounce (547.26 SEK/gram).
Silver started the year at a price of 17.925$ and is reached a price of 24.6 $ per ounce. Thus, the silver price increased by more than 37% this year!
Different economies globally are dealing with the coronavirus: some are struggling to bring it under control while others are concerned about a second wave. There’s a fear of further government ordered lockdowns and its effects on economic recovery. These factors lead to economic uncertainty for investors who pivot to gold, for its time-tested status as a safe haven asset.
‘The global pandemic is providing a sustained boost to gold,” Francisco Blanch, Bank of America’s head of commodities and derivatives research, said, citing impacts including falling real rates, growing inequality and declining productivity. “Moreover, as China’s GDP quickly converges to U.S. levels helped by the widening gap in Covid-19 cases, a tectonic geopolitical shift could unfold, further supporting the case for our $3,000 target over the next 18 months.”
The price of gold has been predicted to reach 3000$ an ounce: more than 50% above the existing record price of gold! You can read this article published in April 2020 here: The Fed can’t print gold: Gold to reach 3000 USD, 50% Above Its Record, as per Bank of America
Central banks across the globe have resorted to stimulus packages to prop the economy. Countries around the world are struggling to reopen after the lockdowns that were imposed as a response to the coronavirus. The threat of not only a recession in the economy but a depression still looms large. In order to understand the difference between the different terms such as recession, depression, and hyperinflation, you can read our article here: Hyperinflation: Looking back at history and consequences of indefinite money printing
The financial crisis of 2008, titled the Great Recession, was the most significant downturn in economic activity since the Great Depression of 1929. The Federal Reserve responded by buying $2.3 trillion of debt and held borrowing costs near zero percent to push growth in the economy. This in turn helped increase the price of gold to a record of $ 1921 in September 2011.
Legendary investor Mark Mobius says keep buying gold even as it reaches record high prices. (1)
“When interest rates are zero or near zero, then gold is an attractive medium to have because you don’t have to worry about not getting interest on your gold, and you see the gold price will rise as uncertainty in the markets are rising,” “I would be buying now and continue to buy. Gold is really on a run I think.”
As the price of gold hit a record high, Tavex once again observes explosive demand for gold as well as silver products from customers in Sweden!
As economic uncertainty continues, you can protect your investments from rapid market fluctuations and hedge against inflation by investing in precious metals! Even the central banks trust gold. You can read more about it here: In Gold we trust: Dutch National Bank states that gold provides security in times of financial crisis
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Disclaimer: This article is for informational purposes only and is not intended as an investment analysis or recommendation to sell or buy commodities. Tavex is not responsible for any decisions made based on this information. Investing is associated with opportunities and risks, and the market value of commodities can both increase and decrease. Past or future yields on the commodities and financial ratios shown above do not represent a promise or an indication of future earnings.