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Welcome to Y 2020.
As the COVID-19 coronavirus brings economies around the world to a standstill, gold is rivaling Treasuries and the Buck as the best-performing major asset so far this year.
The precious Yellow metal proved its safe-haven status with a 6% rally as nearly $16-T was wiped off global stock markets and oil plunged.
There has been a scramble for physical metal as investors in gold ETFs build the biggest stockpile in history and dealers say they are struggling to find gold to sell.
“We have been trying to warn people that something like this would happen,” said Jim Rickards, the author of several books that predicted a coming financial reset. Mr. Rickards has long recommended holding gold as a precaution for wealth preservation.
“I have been saying it for years,” he said. “I am not happy about being right.”
There are echoes of many of the typical gold bug predictions in today’s crisis. Besides the obvious economic and financial-market upheaval, social interaction has become taboo and in some places governments and soldiers are telling people not to leave their homes.
Even the paper market for gold is showing cracks and a squeeze last month on New York’s COMEX, the largest gold futures exchange, added fuel to another of the prophecies: that when the crisis came, there would not be enough gold to go around.
Gold is a defender of your stock and bond portfolio, it is doing it job rightly in here.
The Armageddon survivalists see gold more as the ultimate haven against generalized risk. As a hard asset, it acts as an inflation hedge. It has deep, liquid markets in which to trade, has kept its value over centuries, and, most importantly, physical metal stored in a vault has no counterparty that can default, not even a government or central bank.
It is against this macroeconomic change that gold will thrive as the money par excellence.
Gold rose for a 6th Quarter running in the 3 months ending 31 March and spot prices traded at 1,612 Friday still off the record 1,921.17 marked in Y 2011, but, predictions are mounting that the precious Yellow metal will mark new highs in the coming years.
Mainstream advisors are aboard now.
Analysts at Citigroup (NYSE:C) see gold climbing to a record above 2,000 oz in Y 2021. Some see gold as high as 5,000 oz sooner rather than later.
“Before this is over, gold is going to go up a lot,” commodity guru Jim Rogers said by phone from Singapore this morning. “Whenever people lose confidence in money and in governments, they always buy gold and silver.”
Have a healthy day, stay at home, keep the Faith!