While the health and economic crisis took a giant toll on the market, there’s one asset whose future looks bright, and that’s gold.
With the US economy reeling from the effects of Covid-19 and its associated lockdowns, many are wondering if and when the recovery will actually occur. Millions of Americans are still out of work, with many scared or unable to return to their normal lives, and no one is certain of what the future holds.
There are also increased fears of a resurgence of coronavirus, particularly amid flu season, and concerns about state governments returning to lockdowns. One also can’t help but wonder if, in the event of a Joe Biden victory in November, the federal government will step in to assist or issue a more severe lockdown
Covid 2.0 in 2021?
The idea that we could once again be confined to our homes for an uncertain length of time has many in fear. What we assumed to be a temporary setback has become the new norm and several companies who have been forced to initially shut down still remain closed or significantly limited. Potential lockdowns will obviously hinder any imminent recovery. As it is, the economic repair has been lackluster, with the V-shaped recovery looking more like a pipe dream. It’s clear 2020 will go down as a historical unforeseen recession, but how will 2021 compare?
When it comes to the market and investment trends, it’s safe to say that interest in gold is skyrocketing. With the world economy weakening as a result of Covid-19, gold demand from investors has been consistently increasing. We’re seeing a return to 2008-like levels of investor concern about the economy and financial investments, especially in this political climate, and gold is providing that ideal safe-haven asset investors can rely on.
Gold is unique in that it continues to perform well even when financial assets decline, and millions of investors around the world are opting for gold to diversify their portfolios and protect their assets against loss and inflation. Since gold counteracts and balances the volatility of the stock market, it’s looking to be the catalyst that will allow investors to recover from an inevitable market crash.
World Banks Are Already Scooping Up Gold
Central banks have been some of the major investors in gold over the years, taking advantage of relatively low gold prices to balance their funds and minimize investment risks.
Countries like Russia and China have been among the biggest buyers of gold, but numerous other countries have their hands in the golden pot as well. As much as central bankers want to tell the general public that paper money is perfectly safe, the more they print of it, the less value it has. This is the current issue we’re facing with the dollar as the Fed prints more and more in an effort to provide a quick fix for the economy. Perpetual currency creation causes its value to falter.
In an effort to bypass the dollar and US banking system, there is now speculation that Russia and China’s purchases of gold are part of a plan to develop a gold-backed currency for international trade, to dethrone the dollar from its top position as the world’s reserve currency.
The Gold Standard and the National Debt
While the idea of a gold-backed monetary system may seem far-fetched and antiquated, only since 1971 has the world ever seen a monetary and financial system in which gold plays no role whatsoever.
Debt levels have exploded, with unlimited printing of money, bringing the current national debt to over $26 Trillion. Inflation has caused prices to skyrocket, and the wealth inequality gap is ever-expanding. More and more people are struggling to maintain the same standard of living they’ve always enjoyed, yet the stress and pressure to accumulate debt simply to fund one’s existence continues to grow
The debt bubble has surpassed an unforeseen pinnacle amid the pandemic this year. Experts expect gold to reassert itself, if not as the linchpin of the financial system, certainly as a worthy investment. Gold has already seen unprecedented price increases, breaking the $2000/oz benchmark, and is poised to continue its surge in years to come. . When it does, those who had the foresight to invest in gold will benefit handsomely from the gains they will receive.
The Gold Comeback
Although gold never went away, its rising popularity among investors is breathing new life and momentum for the yellow metal. With endless investment options, gold is once again continuing to play the role of not just a portfolio hedge but equilibrium in a volatile market that can produce significant gains. While some relish the physical and tangible aspect of gold investments, being able to hold bars and minted coins with safe storage, others invest in gold through an opening or rolling over an existing 401K or IRA to a Gold IRA, benefiting from the same tax-advantaged status as a traditional IRA account. The advantages of rolling over retirement accounts allow investors to lock in their current investment gains and protect their wealth.
For example, if you included Gold in your portfolio 20 years ago when it was around $200/oz, today you would be seeing a 10x return. If you invested in 2008 after the market crash, you would have seen a 250% increase in your investment. If you had even bought gold 5 years ago, you would have doubled your investment. And this past year alone, gold has climbed up nearly 30% since March. You can’t ignore the pattern over the years – gold continues to go up in value and is expected to reach new highs in years to come.
With an economy still fully enthralled in recession and an economic outlook that remains grim, the question is – can you afford not to invest in gold? The experts at Allegiance Gold can help you navigate precious metal investment strategies so you can retire with peace of mind.