Why is Gold becoming more attractive to investors interesting in stability and returns on investment.
Gold has come out of its decade-long slumber to be one of the top-performing assets of the past couple of years. So what is driving the rise in this precious metal?
Well, there are several factors in play that are causing the rise in the price of gold. The executives at Allegiance Gold have been educating on the fluctuation of gold and how important it is to diversify a financial portfolio with gold. Here’s a look at why gold has rallied and may continue to rise in the coming years; as well as, gold’s prime day in 2020.
Pandemic Crash & Flight To Safety
2020 will be remembered as the year of COVID. In March of that year, the markets experienced one of the scariest crashes in recent memory. This precipitous fall in stocks led many people to seek a flight to safety in gold. In times of uncertainty, gold is used as the ultimate safe haven. On August 5, 2020, gold saw its prime day as it soared to over $2,000 per ounce. The first time that gold had done so. With the fluctuation of gold being present in 2021, it may be leading to another gold prime day where it could be well over the $2,000 price per ounce threshold.
Debt has been rising in the United States and globally for a couple of decades. The debt has crossed into scary territory in 2020. In fact, the United States’ national debt may be now hovering at around $27 trillion dollars. There is a fear that, at some point, the rise in the public debt may lead to a crash in the U.S. dollar. Gold provides an excellent hedge against a currency crash.
Rotation Away From Risk On Assets
During the 2010’s, risk assets did extremely well. Investors were willing to push up the price of tech stocks, start-ups, and even cryptocurrencies. When the prices of these risk-on assets reach bubble territory, investors will look to hedge their bets with an asset that is uncorrelated. That’s where gold comes in. As stocks continue to risk, you can expect to see some more hedging with gold.
Record Low Yields
Investing in bonds isn’t what it used to be. The 30-year U.S. Treasury bond was yielding as little as 3.40% in 2020. Compare that to the 12% yields that the 30-year U.S. Treasury bond provided back in the 1970s. Many people who would have sought the security of high bond yields are looking at gold as a safer store of wealth. As long as bond yields continue to hit record lows, gold should see some continued upside.
Boomers Looks To Preserve Their Wealth
Baby boomers or people born between the years 1945 and 1962 are starting to reach retirement age in massive numbers. Many of these new retirees will want to diversify away from stocks to provide some smoothness in their returns. Since gold is usually uncorrelated with stocks, the precious metals should continue to experience some price support.
Riding The Gold Bull Market
Gold may continue to rise in the coming years due to rising debt, asset bubbles, and portfolio diversification. Therefore, if you are looking to take advantage of the bull market in gold, then you may want to consider investing in gold bullion or gold coins. For more information on how gold had its prime day in 2020 and more, contact the executives at Allegiance Gold. Allegiance Gold has been educating clients and retirees on the importance of diversifying a financial portfolio with gold, and how it may lead to major profit potential. Call us today at (844) 790-9191 and ask about receiving our FREE Gold IRA Guide.