As we move into the second half of 2020, gold is increasingly likely to serve as an effective and necessary hedge, particularly in light of the Fed’s dovish stance, ongoing geopolitical conflicts, and the risks associated with the recession, stock market volatility, and US election.
Recently the IMF predicted that the situation is now worse than reported – “unlike anything the world has seen before.” and named it: “The Great Lockdown.”
The positive momentum for precious metals continues, as the effects of COVID-19 linger and an overall risky marketplace continues to push investors towards safe havens.
Now that it appears the virus is ebbing and things are slowly opening back up, let’s look at how our two favorite investments have fared so far this year. Did gold provide a hedge? How did metals perform against the stock market? And where is the better value now?
China has taken full advantage of the chaos in the U.S., using the footage of U.S. police trying to control the violence and looting in their own cities as justification for Beijing’s stance against, and treatment of, protestors in Hong Kong.
In the stock market’s four worst bear markets, ones that included a major second leg down, the gold price has risen every time.
Could it happen again?
“Even as businesses see a resumption in customer traffic, many in the U.S. appear to be having trouble getting their employees to come back to work.”
The gold price is up another 2% since my last update on May 1st, trading today at $1736/oz USD. Analysts are making bullish predictions for the price almost daily and the ETF inflows have been net positive for the last 20 trading sessions.
We can actively choose solutions that will help us weather the pandemic and its fallout, as well as prepare us for its ending, whenever that may be and however it may look.
Gold is one of the very few asset classes that has risen this year—but the price is still a far cry from the $5,000 to $10,000 levels he’s mentioned. Silver is worse; not only has it fallen this year, most miners can’t even make a profit at current prices.