Stocks are near record highs, real estate is exploding and everyone seems to be invested in crypto. However, there is one corner of the investing world that is quieting making gains. That would be gold. By 2021, gold is likely to surprise many investors with its returns. And since gold is up this morning at $1,901 per ounce, here’s a look at five reasons why gold will increase in 2021.
1). The United States has printed 20% of all dollars ever produced in the last 12 months alone!
The COVID-19 situation has caused unprecedented challenges to the global economy. In the United States alone, the Federal Reserve has printed 20% of all dollars ever created in 2020 alone. That alone is enough to cause investors to flee into the safety of gold. If the Federal Reserve continues to print dollars at an unprecedented rate, then you should expect gold to move higher. To gauge the overall health of the U.S. dollar, you should consider looking at the dollar index.
2). Gold underperformed stocks in the last decade
During the 2010’s, stocks were the investment of choice while gold and other commodities lagged. Usually, when stocks have a strong decade, they tend to underperform gold over the next 10 years. For instance, gold experienced outperformance during the 2000’s while the stock market lagged. Therefore, you may want to keep an eye on gold when stocks begin to roll over.
3). Stocks are overextended
Since the 2020 pandemic crash, stocks have been on a rocket ship straight upward. In fact, the stock market is sitting at about 260% of the US GDP. Known as the “Buffett Indicator,” stocks tend to fall when the Buffett Indicator crosses the 100% mark. The frothiness in stocks should lead many investors to consider allocating more of their funds into gold.
4). Commodity prices are rising
2021 has already seen some incredible performance in many commodities. Oil has broken out of its 2020 slump while lumber and corn have risen to record levels. As more and more investors begin to rotate into commodities, gold should benefit. If gold begins to hit new all-time highs, then you can see some serious money go into the yellow metal.
5). Financial instability may be possible over the next few years
You could argue that there are financial bubbles everywhere. From real estate to cryptocurrencies, people throwing money are select assets. When these markets experience a crash in their prices, investors may seek the safe haven of gold. In fact, gold is the preferred investment choice in times of financial upheaval.
Getting ready for the next gold run
Gold looks like it could experience some outperformance in 2021. A small investment in gold can pay big returns down the road. For more information on how gold may outperform others in 2021, contact the executives at Allegiance Gold. At our gold IRA company, we have been known for well-educating our clients to become more aware of the importance of diversifying a financial portfolio. Contact us today and you will receive a FREE gold IRA guide!