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Without any doubt, the Covid-19 epidemic has had a significant impact on the global economy. Marketing and sales have fallen, manufacturing output has reduced, consumer characteristics have changed, businesses have faced severe financial hardships, and international unemployment rates have grown considerably. As one of the most influential economic fields, metal-oriented sectors, particularly the gold industry, have raised prices and limited metal-mine supplies. However, in the short term, as we get closer to the comfort zone of being vaccinated in many parts of the world, the price of gold will fall sharply to close to $ 1,500 per ounce. Then governments have been trying to counteract the effects of money creation to restrict the coronavirus impact on their economy. It is certain that these actions will increase the price of gold, which can also be examined from the following aspects: 

A. If governments do not collect injected (created) money in various forms such as bonds and other monetary policies, we will undoubtedly face a decrease in the national currency of all countries. This decline in Each region is affected by the impact of the corona on the economy of that country and region. This devaluation of the national currency in the United States has undoubtedly occurred and will be offset by an increase in the price of gold.

B. Consumerism and the desire to buy in the world’s major consumer markets, including the Persian Gulf countries, will increase significantly after the corona epidemic. This will also contribute greatly to the prosperity of the gold market.

C. In the short term, the withdrawal of US troops from Afghanistan after 20 years will pave the way for the relative peace of mind and lower gold prices, and in the long term, the effects of this war on the global economy will be offset by an increase in gold.

D. The sharp increase in energy production technology in recent years and the increase in the efficiency of solar cells raises the possibility of cost-effective extraction of gold from the oceans, which in the long term will prevent astronomical gold prices; in other words, gold on average. It will not increase beyond global inflation.

Gold as an investment

Till 1970, when a fiat currency structure replaced the gold standard, gold had functioned as cash for centuries. Gold has been utilized as an investment since then. Gold is frequently categorized as a commodity, although it functions more like money. The yellow metal has a poor correlation with other resources and is thus underutilized in the business. Gold, unlike national money, is not linked to any specific country. Gold is a worldwide monetary property, and its value mirrors global emotion, although macroeconomic circumstances in the United States mostly impact it.

The secret of the stable price of gold during the pandemic

While gold fell below $1,500 during the most severe portion of the financial markets crisis, market participants traded their assets to get cash. The loss was relatively small compared to the market crash or the fall in oil prices. The fast outbreak of the Covid-19, the Fed’s highly accommodating reaction (including cutting interest rates to virtually zero), the imposition of market lockdowns, and the severe economic crisis have pushed gold values beyond $1,700. In fact, gold outperformed many other items, reaffirming its status as a secure property and portfolio diversifier.

What’s essential to note is that the closure of the epidemic and the lifting of economic sanctions in the Western world did not cause gold prices to fall. In fact, the epidemic will leave a legacy of slowing GDP rise, ultra-dovish financial institutions, very expansionary fiscal policies, and low-interest rates. Thus, although there are peaks and valleys along the road, these elements are expected to sustain gold prices.

Gold as an investment

Till 1970, when a fiat currency structure replaced the gold standard, gold had functioned as cash for centuries. Gold has been utilized as an investment since then. Gold is frequently categorized as a commodity, although it functions more like money. The yellow metal has a poor correlation with other resources and is thus underutilized in the business. Gold, unlike national money, is not linked to any specific country. Gold is a worldwide monetary property, and its value mirrors global emotion, although macroeconomic circumstances in the United States mostly impact it.

Future of the gold industry 

 During a short-term period of time, mining businesses that effectively prevent or restrict the virus’s outbreak across their activities while maintaining output levels will arise with a superior financial position, taking advantage of high pricing stages and good margins. Since the purchase price per ounce of minerals and reserves of an operational gold mine is much below the present value, the high gold value creates an opportunity for acquisitions and mergers to unify the sector in a long-term period. This provides a high rate of return.

Final words

Covid-19 has had a significant impact on the metal-oriented market and industry, especially gold. Most of the time, contrary to the expectations of experts and investors, these effects have been in a positive direction and to the benefit of market participants. It can be said that the upward trend of gold in the previous year promises that in the bad conditions of the global economy and the occurrence of phenomena such as the corona epidemic, the metal market (gold) can be a reliable source for investors. However, there is no denying the fact that, given the volatile nature of gold in the long-term investment, operating in such a market requires a great deal of experience and expertise.

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