Gold has always been seen as a safe haven asset for Americans in uncertain times. What started as a strong year quickly changed due to the emergence of COVID-19.
With such a turbulent year, let’s take a quick review of gold’s performance and recap a brief analysis to see what we can expect in 2021.
Gold entered 2020 around the $1,500 area and ran up towards $1,700 in early March. In a few short weeks, gold fell down to the mid $1,450 levels due to a pandemic-induced selloff across nearly every asset class.
But unlike many other assets, gold’s retracement in late March was followed by a swift movement to the upside. Even quicker than it declined in price came its sharp rebound back up, eventually breaking its historical all-time high of $2,075 in August.
Combined with the passing of the 2.2 trillion dollar CARES Act and the Fed’s promise to apply quantitative easing for as long as needed- well, it’s no wonder why gold performed so strongly in 2020.
With the second stimulus check of $900 billion signed into action, millions expect a further decline in the US dollar. This could result in increased inflation, thus driving up the demand for a safe haven like gold.
As an attempt to increase the approved $600 individual stimulus payments, the House passed the CASH Act last week. The CASH Act aims to increase stimulus checks from $600 to $2,000 per qualified American.
But just as quickly as the House passed the CASH Act did Senate Majority Leader Mitch McConnell block it just a day late.
However, this will not be the bill’s only chance to be passed as it will be revisited later this week.
Even if the CASH Act is not approved, president-elect Joe Biden has been vocal with his plans to pass “at least” one more stimulus package should he be elected.
Some analysts feel that the passing of the second stimulus check was all that was needed to confirm gold’s bull run in 2021.
Senior market analyst at OANDA, Jeffrey Halley, recently stated in an interview, “Even without extra stimulus, gold could climb higher… Trump’s signature (on the stimulus bill) was the last major risk point to the bull market.”
Peter Grosskopf, president and CEO of Sprott Inc., also believes that gold is in the early stages of a bull market and can easily see levels as high as $2,400 in 2021 due to global debt spiraling out of control.
After the first stimulus check passing, gold saw over 30% gains in just a few short months.
Now with an approved second stimulus check that may be increased and talks of a third in the near future, it’s not a question of “where” gold will go, instead “how high will gold go?”
More stimulus, more money printing- at this point, inflation is almost guaranteed. Is your portfolio prepared? Call American Hartford Gold now at 800-462-0071