Published: 2020.03.19. finnCap: now is the best time to invest in gold?

finnCap: now is the best time to invest in gold? - Preview

With low interest rates, gold demand could rise markedly. Many investors see yellow precious metal as an asset to diversify their investment portfolio. In addition, during the previous financial crisis, the value of gold showed a significant increase. Between 2008 and 2011 the price of gold has tripled, while the stock market could only recover during that time.
Another supporting factor for the price of gold is the limited supply of yellow precious metals in the world. According to exploration data, the world's gold reserves have decreased, and the number of new deposits has decreased significantly. Gold miners complain of a decrease in gold in ore. They have to drill even deeper.
According to Edward Park of Brooks Macdonald, the real value of gold is difficult to determine, as it is influenced by demand from investors, and not an external factor that adheres to traditional economic models. Therefore, investors can be divided into two groups.
One group of investors prefers to invest in government bonds, since for them these securities act as a protective asset instead of gold. Other investors see the yellow precious metal as protection against inflation. They buy it in order to preserve their savings from inflation, which will lead to higher prices for goods.
It is worth saying that the expectation of inflation is low. Instead, financial markets fear a recession. This factor will be supportive for gold. It is highly likely that many companies will have difficulty servicing their debt obligations.
The value of gold will be influenced by various factors. Therefore, investors should expect increased volatility in the precious metals market.