Why Analysts Believe In 2020 Gold Was Used By Many As A Strategic Asset Versus a Tactical Play

FinancialNewsMedia.com News Commentary

PALM BEACH, Fla., March 10, 2021 /PRNewswire/ -- In 2020, Gold gained all-time highs because of risk, rates and momentum, according to industry experts. Gold was one of the best performing major assets of 2020 driven by a combination of: high risk; low interest rates; and a positive price momentum – especially during late spring and summer. Reports show that Gold also had one of the lowest drawdowns during the year, thus helping investors limit losses and manage volatility risk in their portfolios. Gold.org pointed out that: "… by early August, the LBMA Gold Price PM reached a historical high of US$2,067.15/oz as well as record highs in all other major currencies. While the gold prices subsequently consolidated below its intra-year high, it remained comfortably above US$1,850/oz for most of Q3 and Q4, finishing the year at US$1,887.60/oz… Interestingly, gold's price performance in the second half of the year seemed to be linked more to physical investment demand – whether in the form of gold ETFs or bar and coins – rather than through the more speculative futures market… Investors' preference for physical and physical-linked gold products last year further supports anecdotal evidence that, this time around, gold was used by many as a strategic asset rather than purely as a tactical play."  Active stocks in the mining markets this week include Golden Independence Mining Corp. (OTCQB: GIDMF) (CSE: IGLD), Hecla Mining Company (NYSE: HL), Newmont Corporation (NYSE: NEM) (TSX: NGT), New Gold Inc. (NYSE American: NGD) (TSX: NGD), IAMGOLD Corporation (NYSE: IAG) (TSX: IMG).

Gold.org's GoldHub continued, saying: "Economic recovery and low interest rates set the tone. The COVID-19 pandemic raised uncertainty by compounding existing risks and creating new ones. But by the end of last year, investors were optimistic that the worst was over. Looking ahead, we believe that investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navigating potential portfolio risks including: ballooning budget deficits; inflationary pressures ; and market corrections amid already high equity valuations. In our outlook for gold, we believe investment demand will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets. "