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Gold bullion has been on an upward trend for some time now. Investors have been clamouring to get their hands on some bullion but it has become harder to find. Dealers have been complaining about dwindling supplies and mines are finding it harder to keep production up. The biggest stocks in the world right now are Facebook, Amazon, Netflix and Google (F.A.N.G). Because of the big tech revolution that has been going on. These stocks with a cute acronym aren’t the only big stocks on the global markets. Barrick Gold, Newmont and Goldcorp earnings that have dwarfed what the tech companies are making. Analysts report that these mining companies have gained three times what the F.A.N.G stocks have made since May of 2018.
According to the World Gold Council (WGC), there has been a rise in the number of central banks buying gold in the last 18 months. In fact, about 22 central banks increased this gold reserve in 2019 compared to 8 in 2010. The World Gold Council (WGC) expected the demand for gold to go up and more central banks to buy gold and so far, that seems to be case.
Unfortunately, the mining industry is struggling. Gold being a natural resource is scarce. And it has unique properties that are essential for specific applications – you cannot create gold of find an alternative that will replace the metal. The gold recycling side of the industry is helpful. It makes up for the scarcity. The days of the gold rush when people would stumble upon nuggets and become rich has long passed and the discovery of new gold deposit has stopped. Over the past decade there were only 12 gold discoveries made. So we are still extracting old mines for gold and spending lots of money going deeper under ground until we reach a point where it be ones to dangerous to venture further and too expensive. When you sell bullion or gold jewellery to be refined, you help to keep gold circulating.
The discovery of new gold deposits being is stymied by the drop in exploration budgets. If mine supply is lower than what the demand needs it to be, the gold price goes up. The truth is exploration stocks eventually hold the keys to the future for gold. In the mean time, more effort has been put into getting gold from individual hands by gold buyers or cash-for-gold dealers to be refined. Right now, this seems to be a win-win situation: individuals can get high returns for their gold because the supply is low but the demand is high. The price of gold is going higher everyday.
There are other factors that push the gold price, these include an increase in the unemployment levels. If the current situation drags on for long there will be more businesses that are forced to close shop and millions of unemployed people facing an uncertain future. Gold prices will rise. It’s no longer a matter of whether the price of gold can get to $2,000 but a question of when.
You would think that at times like these, the world would be working as one to fight the pandemic but unfortunately, politicians always find a political angle to human suffering. Before Covid-19 the biggest political touchstones were only the US/ China trade war and Brexit. Now it seems that the pandemic has ramped tensions higher with U.S president Donald Trump throwing a hissy-fit about how all this is China’s fault. People are suffering and dying because of nefarious forces seeking to undermine his presidency. President Trump voiced his disappointment with China for not curbing the spread of the corona virus. At some point, before this all started, Trump was willing to sit down with President Xi Jinping, now he is threatening to cut all ties with China. This could be a bargaining ploy but it creates uncertainty in the market. This will lower investor confidence and push the gold price even higher. Right now the future is uncertain and in this uncertain world gold comes in handy because when push comes to shove you can sell bullion for a sizeable amount of money without having to worry about any banking issues or currency devaluation.
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