Investors are poised to pump an additional $2-3 trillion into the gold market in the wake of the Covid-19 crisis, experts say.
That could mean a surge in the price of gold, such as that held in the SPDR Gold Shares exchange-traded fund, could surge by at least 30%.
Covid-19 Could Catapult Gold Prices
The problem is that the lockdowns across the world have led to a slew of financial issues, including long-term damage to a slew of economies and massively increased government borrowing. Such things tend to make serious investors uneasy.
The result is that increasingly investors are looking at buying gold to reduce their investment risks and maintain the purchasing power of their assets, according to a recent research report from Sprott, a Toronto-based precious metals asset manager. Most investors know that gold is a good diversifier of overall risk when held in a portfolio of other assets. Also, over long periods, bullion is said to keep its value in inflation-adjusted terms.
The result is a renewed interest in buying the metal for investment purposes.
“We at Sprott are seeing evidence that some investors are finally ushering gold out of the realm of a fringe trading asset and toward a necessary portfolio allocation,” the report states.
Investors Likely to Up Their Ante On Gold
The firm currently estimates that a mere 20% of investors make allocations to gold, which is at the small level of around 1-2% of those investors’ assets.
A woman wearing a dress made of cash, Germany, 1923.
THESE are the shocking images that reveal the full horror of hyperinflation in post Great War Germany ñ when money was literally worthless. In 1923, Germany was hit by one of the worst cases of hyperinflation in history, with 4.2 trillions marks worth just one American dollar. This out-of-control inflation began somewhat mildly during World War I, as the German government printed unbacked currency and borrowed money to finance military expenditures. The strategy was to pay off the debts by seizing resource-rich territories and imposing reparations on the vanquished Allies. But when Germany lost the war and ended up with massive debts, including huge reparations to be paid to the Allies under the Treaty of Versailles. The country found themselves in economic crisis and increasingly unable to afford the hefty reparation payments.
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