Now, many investors are seeing the value of diversifying their portfolios with gold, and many have plunged into precious metals investments during these tumultuous times. Uncertainty about the end of the economic recession and higher inflation rates may push gold prices higher. Because gold is also considered a highly effective portfolio diversifier due to its low to negative correlation with major asset classes, it is often picked up in times of uncertainty, and so one of the factors to consider is the relationship between gold and the other asset classes under pressure. pleasure in the current financial circumstances.
For example, to combat the recession in the early 2000s, the Federal Reserve lowered interest rates to very low levels, forcing long-term investors to withdraw from low-yield bonds and diversify their portfolios with gold. For a general understanding of market equilibrium, you should know that most of the demand for gold is more or less evenly distributed between investment instruments and jewelry. But then, in the 19th century, most countries printed paper coins backed by their gold values. Gold is best used as a safe investment in times when investors are terrified and regional conflicts can cause such market conditions.
Today, the price of gold is below its recent all-time high, but it remains above support and could be ready for another phase of growth. But in 2030, the price of gold is likely to be much higher than it is today, as the Covid-19 recession will help raise its price. Similarly, gold and interest rates also play their part in the gold price movement, since lower interest rates, which usually occur when there are times of financial uncertainty and governments want people to spend, means that saving is more difficult. This combination of factors shows that there are a number of catalysts that could drive gold higher both in the short term (one year) and in the long term (3 to 5 years), even if one or more do not work.
For example, India consumes 800 to 850 tons of gold annually and rural India accounts for 60 percent of the country's gold consumption. To learn more about investing in gold and silver and what could happen, especially in the case of fiat currencies, download Mike Maloney's best-selling book, Guide to Investing in Gold %26 Silver for free. Coronavirus relief packages and periods of economic recovery led to a decline in the price of gold, while rising inflation, the spread of the pandemic and geopolitical tensions made investments in gold much more attractive. The World Gold Council (WGC) explained that this was due to domestic prices rising to a record high against a backdrop of falling incomes in rural areas.