Fosterville South Exploration CEO Bryan Slusarchuk talks about the growing demand for gold.
Precious metals rebounded to their highest levels in years on Tuesday as a new economic stimulus in Europe and a weak dollar boosted prices.
Spot gold rose $ 24.50 to $ 1,840.40 an ounce, its highest level since September 9, 2011, while silver gained $ 1.34, peaking over 6 years at $ 21.46 an ounce. At the same time, the US dollar index fell 0.54 percent and approached its lowest point in two years.
Tuesday’s price increase reflected “what happened in Europe,” said George Gero, managing director of RBC Global Wealth Management and a member of COMEX’s board of directors, after European Union leaders agreed on a spending package for 1.8 trillion euros ($ 2.06 trillion) to boost the region’s economy as a result of COVID-19.
UNITED STATES DOLLAR WILL WEAKEN AS Coronavir recovery progresses
Precious metals have had a banner year in 2020 as blockades ordered to curb the spread of COVID-19 led to drastic action by policymakers, devalued currencies, and prompted investors to turn to precious metals as a more secure store of value.
In the US alone, Congress has already approved $ 3 trillion of stimulus and is working on another package, while the Federal Reserve has cut interest rates to near zero, while announcing open purchases of assets and programs of loans to support the flow of credit to small businesses. and homes.
Expectations of cuts in interest rates by the Fed forced down nominal interest rates and caused a drop in real yields, which influences inflation.
While they may recover slightly in the short term as economies recover, James O’Rourke, a commodities economist at London-based research firm Capital Economics, expects real yields “to remain low” and interest rates remain at current levels. The two-year Treasury note will be “firmly anchored by loose monetary policy.”
He sees gold ending in 2020 at $ 1,900 an ounce, and will remain “high for years to come.”
While gold prices have attracted all the attention lately, silver has been the big winner since precious metals hit rock bottom in March. Back then, the gold / silver ratio was close to 122, since then it has dropped to 85.74.
“Silver has been a misunderstood component of the reopening because the industrial part that held it back for months now is on its back, propelling it forward,” Gero said, noting that he sees the price of the metal rising to $ 22 by year-end. . and the gold / silver ratio falls to around 80.
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“Silver has finally recovered and is no longer the poor man’s gold,” said Gero.
