No End in Sight for the Gold Rush: Wall Street Agrees
Markets are crashing, economies are uncertain, zero-bound interest rates worry the central banks, and the Fed’s doing everything to keep the economy out of debt.
During these trying circumstances, gold values could fairly be anticipated to increase up to US$1,900 per ounce, or even further to break the $3000 per ounce barrier. Even if gold prices remain the same, gold stocks and other equities will still see a rise in valuation above the market levels, as suggested by Charlie Gibson of Edison Investment Research.
In April 2020, the Bank of America also increased their gold value targets from $2000 to $3000, in light of the tumbling stock markets, declining economic outputs, increasing fiscal expenditures, and suppressed fiat currencies due to the novel COVID-19 outbreak.
Gibson said that the total monetary holding of the U.S. has dropped to $5.1 trillion. Considering the strong correlation between currency and gold witnessed throughout history, this suggests that the gold rush might have no end, at least not for the short run.
The sharp increase in gold values has proven to be profitable for large-scale miners; however, small-scale gold mining companies seem to struggle. According to Gibson, this might be because junior miners rely heavily on the global markets’ financial circumstances rather than the distinctive attributes of the mining projects they are looking to fund.
How Will The Second Wave Of COVID-19 Impact Gold Prices?
According to the latest reports received from Beijing on 15th June, the recent market outbreak has sparked fears of a second wave of coronavirus. Gibson believes that another wave would prove to be an opportunity for large-cap miners to offer financial support to the junior gold mining sector.
The fear of a second outbreak will likely cause gold prices to rise again after a brief dip, as it did when COVID-19 pandemic first hit the markets in March.
What Wall Street Professionals Have To Stay About Gold’s Outlook?
Kitco News conducted a weekly gold survey on 17th June to see what professionals at Wall Street and Main Street had to say about gold’s outlook. The majority of survey respondents were bullish about the gold’s outlook, while some also suggested that monetary and fiscal policies might also stimulate the growth of gold’s value.
16 Wall St. professionals participated in the survey, out of which 56 percent were bullish about the price gain, 13 percent were bearish, and 31 percent were neutral.
In another online poll for Main Street Professionals, 1,299 responses were received. Of these, 53 percent believed the gold would rise, 23 percent believed it would fall, and 24 percent were neutral.
Jim Wyckoff, the Kitco senior technical analyst, said, “Bulls show resilience amid rallying global stock markets.”
Is It The Right Time To Invest In Gold?
The trend analysis and survey results of some of the investment industry leaders suggest that gold remains an ideal investment option under the circumstances.
The fear of another COVID-19 outbreak and business closures, in combination with zero interest rates, crushing U.S. dollar, doubled Fed balance sheets, and plunging stocks, all indicate a profitable future for the gold market.
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