COVID-19: The Supply and Demand of Precious Metals Are Crashing
The panic that COVID-19 brought with it has led to a global upsurge in the demand for precious metals.
Precious metals have historically been a safe long-term investment in times of economic crises. This is evident in the fact that gold prices reached as much as $1900 per ounce at their highest.
But the question is whether this upsurge is sustainable, since the first quarter of 2020 broke all records in terms of gold buying and cash flow into gold exchange traded funds.
Many experts believe that the value of gold will go higher, as the pandemic shows no signs of slowing down. US Mint sales data reveals that sales for Gold American Eagle bullion coins were up by 465% in April 2020, compared to sales for April of last year.
However, the high demand for gold also means a shorter supply of gold in the market.
The US Mint announced that it was temporarily shutting down its West Point bullion production facility in New York due to the dangers the COVID-19 virus poses to workers in the facility.
This will cause the shortage of precious metals to intensify, since the facility specializes in the production of investment grade palladium, gold, platinum, and silver bullion coins.
It’s not just the US Mint either—mints across the globe are shutting down their facilities to ensure the safety of their employees.
While gold is undeniably the most popular precious metal investment, silver has also started to see a resurgence. Silver prices plunged in the middle of March this year, allowing many investors to buy it at lower prices.
American gold investors would be prudent to invest in gold before the widening demand and supply gaps push its price further upwards.
There’s never been a better time to invest in silver, either, due to its price being at its lowest since April 2009. This low price guarantees a high return in a post-pandemic world.
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