The current uptrend in the gold reassures that the dominance of gold could remain throughout 2020.
Second wave of COVID: A second-wave of coronavirus cases is putting the world economy to a standstill again led by further lockdown. With the world sitting at home and having no will and/or money to spend could bring an economy to its knees. As the number of coronavirus cases continues to rise across the world, the price of gold is also rising as more and more investors are reaching to safe heavens because it is the most uncertain time for equity or any other type of asset class.
IMF growth forecast: The International Monetary Fund predicts a decline of almost 5 percent in 2020, substantially worse than its forecast in April.
Rise in Inflation: People tend to hoard more gold in order to hedge themselves against rising inflation, thereby increasing its price in future.
More stimulus likely by the central banks: Many developed and emerging economies see the need for more emergency stimulus to support the economy. So far the US, UK, and Europe have announced a stimulus of around 13 percent, 21 percent and nearly 5 percent, respectively, of their GDP respectively. Further realizing the need for additional support, US is expected to announce $2 trillion worth more stimulus and UK recently announced a second package worth GBP 30 billion. Rise in the money supply in a way means a rise in debt levels. The way countries have increased their debt level, it could create a bubble and shall keep inviting worries in the long run. As central banks across the world begin the money-printing program, this excess of liquidity could lay the groundwork for gold to revisit the previous all-time high.
SPDR Gold holdings rally: SPDR Gold Trust, the world's largest gold-backed ETF holdings rally to over 7 year high on COVID-19 fears. The holdings surged from around 875 tonnes in January to nearly 1200 tonnes in the current month. The need for a safe haven by investors, despite further relaxation of the lockdowns and equity gains is likely to keep gold well supported throughout the year.
It is not easy to answer the above questions. Assumptions either way are not going to be reliable in these times. What stood the test of time is the instrinsic value of gold during times of crisis. It would not harm to own some physical gold in your current portfolio. It is not a risk but an opportunity for portfolio diversication. So buy some physical gold now! We are happy to advise and help you. We are a One-Stop-Shop for all of your sourcing, trading, refining and assaying requirements. Act NOW!