Negosentro.com | Why Gold Will Hit Record Highs Before 2020 Ends | The end of the year is approaching fast. And with that, gold is expected to reach the next leg of its rally.
In Citigroup’s latest quarterly-commodities outlook report, the investment bank predicted gold prices could reach a record $2,200 per ounce within the next 3 months.
And within the next 12 months, an estimated $2,400 per ounce.
Why the spike? Well, 2020 has been quite a year.
The chaos of the U.S election. The nosedive of global bond yields. Not to forget, the COVID-19 pandemic rages on.
And as the country undergoes a second wave of lockdowns—this spike in gold prices is only projected to continue.
What Influences the Prices of Gold
The act of investing in gold can be traced back as early as 550BC. However, it was not until the late 1800s that gold earned its value in modern finance.
So, what influences the price of gold?
Typically, it boils down to a combination of things: the demand for gold, the value of the U.S dollar, and the amount of gold accruing in the central bank reserves.
Currently, however, we are witnessing an economic trend that aligns with the rising price of gold.
Economic booms, geopolitical turmoil, and wartimes have massive impacts on the trajectory of gold prices. Usually, during an economic crisis, investors turn to gold for protection and safe haven.
In other words, if the economy is doing poorly, people purchase more gold.
An example: the Great Depression.
In 1929, the prices of gold increased from $20.67 an ounce to $35 in 1934.
Foreseeing the economic downturn, the Federal Reserve attempted to maintain the gold standard. This further fueled the Great Depression, triggering the stock market crash of 1929. As a response, people began to hoard gold for security.
Another major gold spike occurred in June 2016. Within just six hours, on June 2, 2016, gold prices skyrocketed to $100.
This happened in response to Great Britain’s vote to leave the European Union.
Again on June 23rd of that same year, gold prices rose from $1,254.96 at 4 p.m. on the evening of the Brexit vote. This price increased to $1,347.12 at midnight. Investors purchased gold as a hedge against a declining euro and British pound.
Those are just a couple of trends to note.
Why 2020 Is Different for Gold
So when looking at 2020, there’s really no surprise.
Many events that have happened this year have rocked the U.S to its core, triggering record high gold prices.
2020 has been a year of low interest rates and financial uncertainty.
This comes as a result of the global pandemic that triggered the market crash, and in turn, prompted gold to enter a bull market.
In May 2020, gold increased from $47.99 to $59.86.
And as the pandemic continued, the price of gold has only further heightened its utility as a hedge to the S&P 500.
With the weakening in economic growth, investors everywhere are looking to gold for refuge, or a “safe-haven” rather, reallocating their wealth into gold.
What Experts Are Saying
Ultimately, the impact of the pandemic is significant.
Mounting fears over the future of the economy in the aftermath of COVID-19 has triggered investors to flock to gold in search of safe haven.
And in response, gold stocks have taken off.
Newmont Corporation and Barrick, shares of the two largest gold miners in the world, have respectively rallied 45% and 53%.
Even lesser-known mining companies, such as Josemaria Resources, are becoming leaders in gold – the company, which is a junior, boasts a reserve profile of 7 million ounces of gold.
Newmont’s CEO Tom Palmer said in a recent interview with Bloomberg, he believes that gold prices will remain high for some time to come, reinforcing Citigroup’s outlook.
Where to Invest in Gold Right Now
As you start to consider where to invest in gold, you may want to look at this junior mining stock with big reserves.
Backed by the Lundin family, which has been making fortunes for investors for more than 30 years, Josemaria Resources (TSX-V:JOSE / OTCQB:JOSMF) is a copper-gold deposit located in San Juan Province, Argentina. The Company is committed to advancing the development of the project after disclosing its proven probable reserves of 6.7 billion lbs of copper, 7 million ounces of gold, and 30.7 million ounces of silver.
Many notable names are associated with Josemaria Resources (TSX-V:JOSE / OTCQB:JOSMF). The Lundin Family has been the driving force behind some of the top-performing mining development companies in Argentina, and the world, for decades, including the Argentina-based Bajo de la Alumbrera copper-gold deposit, and the Veladero gold deposit, which were both later acquired, giving shareholders huge returns of 1757% and 1091%, respectively.
Now’s the opportunity to make an investment worthwhile.
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