As the particularly eventful year 2020 draws to a close, it is time to take stock and make projections for 2021. It must be said that few of us could have imagined such a scenario between a global pandemic that has brought down all the international stock markets, and in return a crazy year for alternative investments: from gold that broke its record in August and is trying to brush past it at the end of the year, to Bitcoin (BTC), this year’s king, which has even managed to make the front page of the biggest newspapers. But in a still very uncertain health and economic context, how could the coming year go? Will we still see bullish phenomena for the “non-traditional” economy? Will the States’ money plate continue to turn? For this first paper of 2021, I propose to look together at the bright future of precious metals and the possible gold rush that could continue to occur.
A brief history of gold through the ages
As we have already explained to you, gold has always been considered a safe haven, incredibly resistant to all the jolts of international finance and different forms of crisis that may exist. Yet some people continue to wonder how this is possible?
Gold is truly the oldest barbaric relic in the world. First of all, the yellow metal has been a tool of exchange since the dawn of time and currency was historically gold. But also, the price of gold tends to rise as the economy collapses and interest rates are negative.
Why this phenomenon?
First of all because gold is a precious metal, and its rarity allows it to maintain a special place among all citizens and investors. Also, because by making it increasingly rare, its price increases. You know as well as I do, everything that is rare is expensive, in general. Also, it is important to know that geopolitics largely influences the price of gold. Thus, over the decades, surprise, lack of a clear scenario, geopolitical unrest and lack of confidence in governments have allowed the yellow metal to break its records.
It is also said that gold is an interesting barometer to judge the health of a government, the economy or world politics.
And in this game, it must be said that the situation in recent years has been favorable to gold: from the geopolitical tensions between the USA and China, to Brexit, to the COVID-19 crisis, the world has had its fill of tensions and it’s not about to stop.
Throughout the ages, numerous phenomena have helped to validate this thesis and its positioning as a refuge value. Let’s look at the main events of the last 50 years:
Starting with the Bretton Woods Agreement (1944), a new international monetary system was created, but it wasn’t until 1971 that gold began to fluctuate freely at a time when the dollar was no longer convertible into gold;
1979: the price of gold surged for the first time at the end of the 1970s during the invasion of Afghanistan by the USSR. The price of gold surpassed $660 per ounce, a record for the time at the beginning of the 1980s;
The 2000s: the creation of ETF funds and the arrival of a new financial crisis once again produced a rise in the price of gold between 2003 and 2010. At that time, some investors even went so far as to sell their life insurance policies to invest in gold. The price of gold thus rose from $261 per ounce in 2001 to $1911 in September 2011, the previous record. It must be said that the safe-haven value was sailing in particularly murky waters: 2 consecutive stock market crashes (internet bubble in 2001 and stock market crash in 2008), subprime crisis, bank failures (RIP Lehman Brothers), inflation, sovereign debt crisis?
Finally, the year 2020 will mark a new record against the backdrop of the trade war between China and the United States and, of course, the COVID-19 crisis, which is likely to profoundly upset the global balance.
2020: a brilliant year for gold
The year 2020 marked a turning point by creating a bullish rally for gold and precious metals in general. This was caused in particular by the collapse of the financial system due to VIDOC-19 but also by the scarcity of gold, which continues to drive up the price.
Gold price in 2020
The situation even led Bloomberg to say that gold would continue its bullish rally until 2023, in the same way as silver.
Gold surpassed $2,000 last August, just as Bitcoin, too, was gradually reaching its ATH. One would think that yellow gold and digital gold follow each other and look alike.
The end of the year 2020 will also have seen a fall in the price of gold, easily explained by two global phenomena: the election of Joe Biden in the USA, which we mentioned in a previous article, but also the arrival of the vaccine against COVID-19, which has given back to investors a bit of enthusiasm to invest in riskier supports. However, it should be noted that gold has increased by 40% in the year 2020, a good performance.
Among the precious metals, silver also came out the winner of this year of chaos: it is up 47.5% over the year 2020 and has risen to $26 per ounce, benefiting from the general craze for industrial metals. Many analysts predict a doubling of silver prices between now and 2023.
silver price in 2020
Finally, among the industrial metals that have been hard hit by the slowdown in industrial production worldwide, particularly in China, the world’s factory and the cradle of the pandemic, copper in particular has recovered well and is showing very good statistics with an increase of 27% over the year. And for once, the red metal is following the same curve as the yellow metal, which was not always the case.
In short, the year 2020 will undoubtedly have been the year of precious metals and industrial metals, and even more so, the right time to start alternative investments, but what about 2021? Zoom on the main projections!
The outlook for 2021: the gold rush and the breakthrough of silver metal
If we first look at the prospects for gold: the old barbarian relic could, according to Goldman Sachs, exceed $2,300 in 2021 and thus quietly continue its bullish rally despite a still unstable economic and political situation. Thus, if Joe Biden continues to pass stimulus measures to help lift the U.S. economy, which has been heavily hit by VIDOC-19. At the same time, the resumption of demand for physical yellow metal could contribute to a rise in the price of gold, particularly in India and China, where large traditional buyers like to invest in gold bullion especially in times of uncertainty.
Some analysts are even saying that gold could even reach $3,000, and looking at the Bank of America forecasts, this scenario could well come true.
Source The Coin Tribune
Disclaimer: All articles published here are for information purposes only. They can in no way influence your investment decision. Only you can decide on the best possible investment for your money, and whatever decision you make will involve risk. The information or data included here may already be out of date and should be verified from another source, in case you decide to act.
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