[ad_1]
Macroeconomic data has indicated the magnitude of the effects the virus will have on world economies, and even if the resumption of economic activity will somewhat moderate the effects of unemployment or growth, significant incentives from the authorities have been needed to limit the impact of the crisis. which meant some compromises.
In this context, investors are trying to identify the “winning” assets, according to the latest analysis by brokerage firm XTB Romania.
“We could say that gold is one of them. Gold is one of the few markets that has had a positive performance since the beginning of the year, achieving progress of more than 10%. This evolution has been favored by its character as an asset of refuge, being one of the most popular options for investors in uncertain times due to its intrinsic and stable value, given that we are approaching a period of recession, which the International Monetary Fund has announced that it could be the largest in the world. In the financial crisis from 1929 to 1933, the appeal of gold could continue even at the expense of other stable assets such as major currencies (euro, US dollar or Japanese yen), “explains Radu Puiu, research analyst at XTB Romania.
In addition to the effects of the economic contraction, the emergency financing packages and capital injections of the main central banks did not have “adverse consequences”. Despite the positive short-term effects, in the long term they can create serious problems, such as large budget deficits that can be difficult to adjust or too much money leading to their devaluation.
The US Federal Reserve USA Either the European Central Bank has announced extensive asset purchase programs, which involve the acquisition of securities by the central bank to ensure appropriate levels of liquidity. Although these measures help markets, they often become difficult to reduce or interrupt because they become a component of the financial system, and investors become accustomed to that context.
Since there is a limited amount of gold and the mining volume is much slower and more difficult than the central bank printing process for coins, the precious metal could be a more secure and stable asset in the coming period.
At this point, the price has exceeded an important barrier, we are talking about the psychological level of $ 1,700 per ounce, being at a distance of approximately 12% of the historical maximums of approximately $ 1918 per ounce. Record levels were reached in August 2011, therefore we are talking about the period of economic recession that followed the financial crisis. Recently, there has been a clear upward trend supported by fundamental arguments, it being possible to see an expansion of current momentum and perhaps even reach new all-time highs, if we consider the breadth of the movement from 2008-2011, when gold appreciated by more than 160 %.
Investors generally have three alternatives available to invest directly in the precious metal: they can physically buy the asset, they can invest in an ETF that tracks the price of gold, or they can trade futures, options, or CFDs in the commodity markets.
Although more accessible to investors than other commodities, such as oil, physical ownership of the asset involves a number of impediments to the retail investor: business costs, storage costs, or insurance. For this reason, ETFs that follow the price of gold or instruments based on futures contracts may be a better option. According to the latest information, central bank financial support measures may not have been finalized, and the announcement of a new wave of interventions could confirm the popularity of gold.
Did you like this article? Follow Business24 on Facebook too! Comment and see in your news feed on Facebook the latest and most interesting articles on Business24.
[ad_2]
