What Opportunities Will COVID-19 bring for Precious Metal Investors?
Amid the coronavirus pandemic’s impact, precious metal investment gains prominence as federal, state, and local governments enforce strict lockdowns.
This is has led to many businesses being forced to be closed for good, as they don’t have the resources to stay viable in the long term. Many of these businesses may have to sell their assets and lower prices and liquidate their inventory. The question that arises is what happens to precious metals and what opportunities do their investors have?
The Effect of Precious Metals
Unlike other goods, valuable metals cannot just be sold at a significant discount to liquidate inventory. The price of precious metals is linked to the gold exchange rate. Currently, that rate is around $2000, that’s the rate sellers have to use.
However, precious metal stores, like jewelers, are struggling like other business owners. They have trouble meeting employee payrolls and paying rent and covering utility expenses.
Therefore, they need to find a way to get rid of their inventory. Many jewelers are selling large quantities of precious metals, like gold, silver, and platinum on discounted prices.
While it might not be easy to sell a $400 gold necklace for a significantly lower price, it is possible to sell a larger quantity, so the price discount is distributed through the multiple items.
Precious Metal Prices
While most stores have had a difficult year in 2020, precious metals have risen exponentially. In 2020, gold prices have increased to more than $2000, a historical world record. The case is similar for other precious metals like silver and platinum.
This is mainly due to the economic fallout of the coronavirus. The uncertain economic situation has caused people to seek financial comfort in physical precious metals. However, as the economy has stabilized over the past few weeks, the price of gold and other precious has leveled off.
The Future of Precious Metal Investing
The future of precious metals seems uncertain. The recent stagnation of gold prices shows precious metal values are not going to increase forever. Additionally, the coronavirus has declined for almost two months, and the economic indicators look much better today than they did two months ago.
However, the coronavirus pandemic is far from over. There could be a sudden rise in the number of cases or another wave of the infection. Furthermore, the US is about to go through a volatile and complicated presidential election, leading to further economic uncertainty. This could drive up the prices of valuable metals, at least in the short term