- Money Control: Keep Faith But Stay Smart With Gold
- Oil Price: Solar Boom Will Benefit Silver
- ValueWalk: How Gold Will Fare in 2021
- Yahoo: How Inflation Will Affect You in 2021
Image: Money Control
Money Control: Keep Faith But Stay Smart With Gold
While the gold price took a drastic fall of 15% (compared to the August price of $2075) in November, it’s still 22% higher compared to the start of the year. According to Money Control, much of this surge is thanks to COVID-19 pandemic. While many investors put faith in the coming vaccine, it will be hard to revive the economy in a hurry. Distribution speed of the vaccine isn’t certain and the growth stimulus made by central banks does not guarantee that the economy will turn around.
They recommend gold as a perfect hedge in an investment portfolio and believe that the global community will have faith in it. In November they witnessed a net outflow from gold ETF products of $6.8 billion, which has had a significant impact on the price. But as many markets are in an economic slowdown, physical buyers are reluctant to buy gold. Some money managers might also begin favouring cryptocurrencies.
In conclusion they state that the year’s price rally has been an extraordinary and one-off event. Any positive news for the global economy might trigger a sell-off. They recommend maintaining caution and waiting for a correction before buying.
14.12.2020, Debate Saha
Oil Price: Solar Boom Will Benefit Silver
According to Oil Price, silver is predicted to reach a record price of $50/oz in 2021 thanks to weak dollar and loose monetary policy by the Federal Reserve. It will also be uplifted by the rising demand from the solar energy sector.
Saxo bank analysts expect for the US dollar to continue to weaken even after the vaccine distribution begins due to the high amount of debt incurred due to the pandemic. Fed cannot deal with the debt and cheap money used to mitigate pandemic’s impact on the economy without causing the economic bubble to burst. This means there will be price inflation in 2021.
This development is bullish for both silver and gold. Silver’s demand is also on the rise as solar power generation is expected to double by 2025 and it possesses the lowest electrical resistance among all metals. Even if the economy will recover slower than expected, this green energy will keep up the demand.
On the other hand, silver supply has been hit hard due to mine shutdowns, and its production will likely fall by 6.3%. Because over half of silver supply is a by-product from other mining, it will be hard to meet with the excess proportional demand. At the moment of writing, silver-gold ratio is over 76 to 1, so its still undervalued compared to gold. But it is likely to close the gap eventually.
ValueWalk: How Gold Will Fare in 2021
Gold price estimates for 2021 look positive, despite news about the COVID-19 vaccine, writes Michelle Jones from ValueWalk. Gold still retains many of its other supports: there are still many uncertainties related to economy, finance and health, which can even continue to 2022 in some form.
James Steel of Precious Metals Report says that the debt and liquidity caused by current monetary and fiscal policies mean a bull market for the gold price, and this trend will continue for the foreseeable future. However, high prices have eroded the underlying demand for jewelry and other physical gold, meaning that the investment demand must remain high to absorb the market supplies. He believes that the current highest threat to gold prices is ETF liquidation.
Steel doesn’t expect gold to fall as low as January 2020, though the vaccine might pust the price as low as $1,700 momentarily, and next year’s rallies might be weaker than this year’s. He expects the global recovery to speed up and gold to remain “reasonably firm but below 2H 2020 levels”. His current outlook for gold price is $1,907/oz to $1,965/oz and gives a long-term forecast of $1,850 and $1,600 in 2022. The trading range during 2021 will be a wide $2,010 and $1,695.
10.12.2020, Michelle Jones
Yahoo: How Inflation Will Affect You in 2021
The USA might face its first major inflation in almost 40 years due to a massive federal deficit, rise of demand when the COVID-19 countermeasures are lifted, and the changing policy of the Federal Reserve, writes Ann Logue of Yahoo Finance. There will be a general increase of prices across sectors affected by the pandemic, such as travel and sporting or culture events.
While inflation has been very low since 2008, the current trend is no reason to panic: moderate inflation is a normal part of the economy, and low wages will also pressure prices. Inflation can even stimulate parts of the economy, such as business investments and bank interests. And over time, wages will increase to meet up with costs. Generally inflation will benefit debtors, as the money they are paying back is worth less compared to when they borrowed it. On the other hand, those who save suffer, because the value of their bonds and savings will decrease under inflation. In conclusion, Logue advises not to wait for sales before buying as the prices will go up the longer you wait.
13.12.2020, Ann Logue
This is Jalonom’s weekly review of interesting precious metal news from different international sources. We wish to offer the reader a compact and quick to read review of weekly news. Especially we focus on news relating to gold investing.