The entire word holds its breath when it comes to the potential economic fallout following the coronavirus pandemic. Looking at the price of gold, it is not difficult to see which asset is still considered to be a safe haven amid a sea of turmoil.
The Financial Outlook Isn’t Good
Anyone with a basic understanding of the financial system has to admit that this year will be very brutal. Not just in terms of businesses being shut down due to COVID-19, but primarily due to the impact that follows when things return to “normal” again. Inflation will become increasingly problematic, resulting in a reduction of purchasing power.
One way to offset those concerns is by effectively investing in assets that can net a potential profit moving forward. Gold and other precious metals seem to check the right boxes in that regard. Currently, central banks continue to print money whenever they feel the need to, without thinking about the long-term repercussions.
It is not surprising to see global interest in gold is on the rise again. This same trend took place right before and right after the 2008 financial crisis. By the look of things, the coronavirus crisis may put an even bigger strain on the world’s monetary system.
For those who are not familiar with what has been going on: it is the first time in history that so much “extra money” is brought into circulation in quick succession. No one knows what the consequences will be.
The previous major injection of liquidity triggered financial woes that could still be felt years later. Only time will tell what will happen after the coronavirus crisis has been subdued, assuming that is even possible in the first place.
Gold Demand Will Intensify
Although COVID-19 has made its impact on the precious metals industry as well, it seems to absorb any volatility rather well. The demand for gold and silver is bound to pick up again, especially now that producers of precious metals are reopening their business or even looking to expand later this year.
Unlike other investment options, gold is the only viable hedge against inflation. During times of financial instability – and those will occur in the coming months and years – gold retains its value well, and even appreciates to boot.
Elliott Management Corp.’s Paul Singer even considers gold to be the most undervalued asset on the market today. He even expects gold to rise to multiples of its current price in the foreseeable future, which is a very bullish statement.
Just sheer optimism will not make that vision come true, however. During the 2008 financial crisis, alternatives such as Bitcoin were not accessible yet. Today, they are on the market, accessible to virtually everyone, and appreciating in price rapidly.
Keeping an eye on the gold/BTC trading pair here on Vaultoro may be worthwhile, as there may be ample potential profits waiting to be reaped.