The year hasn’t been off to the start Americans had hoped for and uncertainty around the country’s progress is growing.
Many are wondering where this leaves gold, especially considering that the global monetary policy remains very accommodative.
Chief gold strategist at State Street Global Advisors, George Milling Stanley, said in a recent webinar that gold’s run is looking a lot more stable than it was nearly 10 years ago. He added that there are fundamental reasons supporting gold prices at current levels.
2020 and the impact that the Coronavirus dealt on our economy is often compared to 2008’s economic crisis. However, things are much different this time around, especially for assets like gold.
Some professionals like Adam Perlaky, manager of investment research at the World Gold Council, believes that gold will continue to rise due to the uncertainty and unknown of COVID. He’s quoted in a recent interview saying, “We have never seen anything like the COVID-19 pandemic, and we don’t know what the full economic impact will look like.”
When you compare the last year to the 2008 financial crisis, many families were financially devastated and most have not fully recovered. What makes the pandemic different is that we have enough hindsight to prepare and diversify accordingly.
The massive impact of the pandemic isn’t over and if it’s one thing we’ve learned is to not put all your eggs in any one basket– a strategy recommended by many professionals.
Perlaky notes that he expects the gold market to continue to benefit from further uncertainty in 2021 and believes that gold will continue to be an attractive safe-haven asset as, “equity valuations trade at record levels and bond yields remain at historic lows.” He also added that bonds don’t provide investors with the protection that they once did.
Van Eck CEO, Jan van Eck, told CNBC recently that, “Investors have been fleeing bonds” and that as it’s driving “investors to consider hedges such as gold…”
Both Perlaky and van Eck agree– the traditional 60/40 portfolio model is broken and just isn’t working anymore. Perlaky states, “Creating a global multi-asset portfolio that includes a portion of gold is the way to go.”
Milling-Stanley stated that research from State Street Global Advisors is showing that holding a 10% allocation in gold gives investors the biggest advantage to lower their risk and with market volatility still in question, gold is still showing the best returns.
Gold set a record in 2020, moving past $2,000 to breaking its all-time high price. Milling-Stanley said that he sees potential for gold to reach estimates of $2,300 an ounce, setting another record high.
Let’s be honest, uncertainty isn’t going away anytime soon. Americans will still be looking at gold as a safe-haven asset.
Combine this with the recent passing of the second stimulus check and possibly more to come, and potentially exceeding inflation due to quantitative easing will continue to help support gold’s safe-haven purposes for individuals.
There are many positive signs for gold right now, including the support of professionals worldwide. 2021 doesn’t seem to be going much different from 2020, and the need for a financial safe-haven remains the same.
Call American Hartford Gold now at 800-462-0071. We can help prepare you for whatever 2021 may throw at us.