Közzétett: 2020.06.24. Why are rich people buying up a lot of gold right now?

Why are rich people buying up a lot of gold right now? - Előnézet

It is worth saying that before the advent of COVID-19, most private banks practically did not advise their customers to buy yellow precious metals. But now the situation has changed dramatically. Now there are recommendations to have up to 10% gold in the investment portfolio, as the policy of the Central Banks reduces the yield on government bonds. In this situation, assets that do not give interest income become attractive. In addition, the growth of the money supply, which is not backed up by anything, will lead to inflation and devaluation of many assets and currencies.
Since the beginning of the current 2020, the price of gold has already increased by + 14% to $ 1,730 per ounce. Many bankers rely on yellow precious metals, as it is a protective asset against both inflation and deflation. Gold has good prospects for further growth.
Reuters interviewed nine private banks that manage a total of assets worth about $ 6 trillion. They reported that they recommend that their customers shift part of their capital to gold. According to the forecast of some banks, the cost of yellow precious metals will be significantly higher at the end of the year than current levels.
According to the forecast of the Swiss bank UBS, by the end of this year one ounce of gold can reach the level of 1800 dollars. The driver of growth will be very low interest rates, as a result of which investors will seek safe assets to preserve their capital. But in the case of the second wave of coronavirus infection, the price of gold can rise even up to $ 2000 per ounce. “Recently, investors have grown nervous. They are looking for optimal assets that will remain stable under various negative scenarios. It is gold that is such a stabilizing asset, ”the bank’s review says.
The growth in demand for gold will lead to a natural increase in prices for it, since even a slight flow of capital from the stock market, which is estimated at $ 200 trillion, will inevitably cause a price rally in the gold market, which is estimated at only $ 5 trillion.
According to bankers, the demand for the supply of physical gold increased on the part of customers. Some investors wanted to buy a wholesale volume of precious metals, but banks do not recommend this. Older clients have a high level of anxiety about inflation risks. They still remember the times of hyperinflation. Hence the increased fear of this phenomenon.
Banks offer their customers four options for investing in the gold market, namely: shares of gold mining companies; shares of ETF funds backed by physical precious metals; derivatives (options and futures) and physical gold in the form of coins and bars. The most worried investors prefer to have real physical gold.
Some investment banks offer not only gold, but also storage services. Most precious metals are stored in Switzerland and Singapore. These two countries are considered the most reliable due to the developed infrastructure oriented to the gold market. And one more thing: interruptions in the supply of gold in March and April of this year due to quarantine measures at many refineries only increased interest in investing in gold.