An unprecedented year of economic turbulence and fallout still left some investors very happy in 2020. Amid the coronavirus pandemic, gold prices surged across the year to a high of $2,067 per ounce in August.
Investment demand for the yellow metal, according to the World Gold Council, surged 40% from 2019. While many people still buy gold online in the form of physical bars, coins, and rounds, 2020 also saw a large growth in ETF funds like SPDR Gold Shares GLD, which holds solid bullion.
As last year came to a close, gold prices did start to slip as people expressed greater optimism that COVID vaccines and the loosening of lockdowns (in some jurisdictions) would jump-start the economy.
No matter the price point, gold still remains a great investment in 2021. The precious metal stands to gain based on a variety of geopolitical and economic factors that could lead to turbulent economic times – driving the prices of traditional ‘hedges’ like gold up.
Keep reading for a few reasons why gold still sits as a strong 2021 investment.
The Spectre Of COVID-19 And Questions Of Normalcy
The media heralded the launch of vaccines designed to quell the tide of the coronavirus. However, supply issues have plagued some American states from inoculating people as fast as preferred. Global controversy about the efficiency of the vaccine has also led many to worry that the ‘new normal’ might last for longer than anticipated.
Amid these concerns, the total amount of coronavirus cases still remains relatively high. Officials in the United States noted how even though cases were down, they were still at the level seen around Thanksgiving. Gold proved a popular investment all across 2020 and only looks to remain the same this year as worries about COVID keep markets tame.
Government Responses And Interest Rate Cuts
Gold prices have only risen as governments and central banks across the world embarked on aggressive interest rate cuts, money printing, and quantitative easing (QE) programs. National governments doubled down on these efforts all of last year and look set to continue in 2021, especially with new President Joe Biden in office in the United States. If the Federal Reserve takes further action this year, fears of inflation will only rise and lead more to purchase gold bullion at a more cost-efficient price than before. Federal Reserve chairman Jerome Powell has a history of abandoning inflation targets and looks set to continue the same pattern in 2021.
Questions about Brexit and the UK economy also look set to keep gold prices up during 2021, as England and the wider European continent struggle to balance a big change to their economic output while mitigating and managing economic turbulence from COVID-19.
Trade War Fears Across The World?
Even if the global economy stabilizes in 2021 as the world eases out of coronavirus restrictions, the looming trade tensions between many nations could only get worse in 2021, driving up the price of gold as nations suffer from the fallout.
For example, China remains resolute in tariffing Australian wine, while Joe Biden indicated he has no plans to remove 25% tariffs on many Chinese exports that President Donald Trump taxed in 2018. The European Union also taxed the United States to the tune of $4 billion over controversy with Boeing.
If trade wars and talks heat up in 2021, the worldwide marketplace could fall into turbulence, which would only boost the price of hard assets like gold.
Exposing A Portfolio To Gold In 2021
The above reasons are just a few reasons why exposing a portfolio to gold is a smart 2021 move. Investors have a wide range of physical bullion options to choose from, like gold coins, bars, and rounds.
Stock in gold producers like Barrick Gold Corporation or Fresnillo in the UK is another strategy, along with investment in ETFs like iShares Gold Producers UCITS, or even cryptocurrencies backed by gold bullion.
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