Analysts Indicating Gold's New Golden Era Has Just Started
- FinancialNewsMedia.com News Commentary
PALM BEACH, Fla., March 31, 2021 /PRNewswire/ -- Gold is the world's oldest safe asset, always thriving in times of uncertainty. Historically, investors have reverted to it as a hedge against political and economic tumult, with its price jumping during wars, contested elections and economic crises. During the Great Recession, gold's price trebled from early 2007 to 2011. The same scenario is now repeating itself with the global pandemic. In the summer of 2020, while stock markets were recovering from a pandemic-driven slump, the old asset made its comeback with a roar, according to an article in the World Finance. It said, in part: "In August, the price of gold surpassed the threshold of $2,000 an ounce for the first time in history. Few people who had been following the market were shocked at the news. "If you asked me at the end of 2019, I would have been bearish on gold. But given COVID-19 and the fiscal stimulus put in place, this didn't come as a surprise," said a senior commodities analyst at an investment bank." Active stocks in the mining markets this week include Barrick Gold Corporation (NYSE: GOLD) (TSX: ABX), Clarity Gold Corp. (OTCPK: CLGCF) (CSE: CLAR), Newmont Corporation (NYSE: NEM) (TSX: NGT), Amex Exploration Inc. (TSXV: AMX) (OTCQX: AMXEF), Franco-Nevada Corporation (NYSE: FNV) (TSX: FNV).
World Finance added: "Unlike many financial products, the precious metal had a fine year. By the end of 2020, its price had increased by 25 percent, outperforming other major asset classes. Its ascent was temporarily halted by a drop in March, coinciding with the economic shock brought by lockdowns, but this was followed by a rally that led to the record-breaking peak. In autumn, its dollar-denominated price hovered between $1,800 and $1,900. One reason why the world's oldest store of value is making a comeback is its scarcity amid a boom of financial products. Currently, it represents less than 0.5 percent of global financial assets, down from three percent 40 years ago, while its share of international reserves has fallen to 13 percent from close to 50 percent 20 years ago. It may become even scarcer amid worries over the carbon footprint of the gold-mining industry. For some analysts, gold's second coming is raising questions over the post-COVID-19 future of the global economy. In an era of low inflation, aggressive money printing and negative real interests, fiat money is losing its appeal, whereas governments cannot print gold. Many interpret central banks' gold-buying spree as a sign of diminishing trust in legal tender. Increasing geopolitical tension may also boost its importance."
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