Precious metals are enjoying the gains with gold rising 1.23% today to reach $1,840 per ounce today although it is Silver which has been stealing the show by having its highest finish since 2016.
With the government and central banks releasing excessive stimulus, the new normal is benefiting the metals just as much as it is stocks which have been rallying hard throughout 2020.
The expectation for even more stimulus and lower interest rates amidst the rising debt and increasing coronavirus infections, slow economic recovery, and US-China tensions have prompted investors to keep buying the yellow metal.
— Charlie Morris (@AtlasPulse) July 20, 2020
“I wouldn’t be surprised to see gold test the all-time highs set in 2011 at around $1,900 per ounce,” said Thomas Taw, head of APAC iShares investment strategy at BlackRock previously.
With rates at virtually zero, gold and the likes of bitcoin becomes far more attractive when the real yield on alternative investment becomes negative.
Also, a meeting of European Union leaders in Brussels is also in agreement on a huge spending program of €1.82 trillion (over $2 trillion USD) while US lawmakers are set to start talks over an additional coronavirus aid bill.
All the money central banks are pumping in the market means further currency debasement which should help gold “profit as a store of value” and of course Bitcoin.
Silver, Gold, Bitcoin, etc all look to be ready to make explosive moves higher given the sheer amount of money printing going on around the world. Here is a chart or front-month silver going back 10 years. pic.twitter.com/i9kHa9TVmi
— 🇺🇸Kyle Bass🇺🇸 (@Jkylebass) July 21, 2020
However, for now, gold is stealing the thunder with bitcoin down 6% since May 7th when the market topped at just above $10,000. Also, billionaire investor Paul Tudor Jones announced his fund was buying the digital asset calling Bitcoin the “fastest horse” and an inflation hedge while gold has jumped 7.5% during the same period.
While bullion has been enjoying all the bullish factors, bitcoin has been stuck in a rut all this time after surging to $10,000 in the aftermath of the March sell-off. The range bitcoin has been trading has been getting tighter and tighter, one month price range has been actually at an all-time low, with volatility declining as well.
Today, however, after a long time, bitcoin is making some moves, rising above $9,400 with ‘real’ trading volume also increasing albeit slowly to $1.3 billion.
Meanwhile, Citigroup analysts say gold hitting a new all-time high is “only a matter of time.” The yellow metal is already up 20.5% YTD.
The precious metal has already posted fresh records in G-10 and major emerging market currency this year. Gold is expected to climb to a new ATH in the six-to-nine months with a 30% probability that it’ll top $2,000 an ounce in the next three-to-five months. Last month, Bank of America made even a higher top prediction at $3,000 per ounce.