Precious Metals
With a weakening job market and rising economic uncertainty, more and more Americans are losing confidence in their financial security in the face of growing anxiety about the future.
With the exception of the unexpected but brief recession in 2020, Americans have been spared from crisis since the 2008 financial crisis ended in 2009. But how much longer will this economic honeymoon last?
High consumer prices, stagnant wages, and financial uncertainty are weighing on American households, leading them to look for safe havens ahead of a potential financial downturn.
One such safe haven is gold, which has served as a safe haven asset for centuries. And with renewed safe haven interest in gold, there are a few things to keep watch for in gold markets today.
Gold has seen numerous record high prices this year, and has recently shown renewed growth to hit record highs near $3,800 an ounce. Analyst price targets have been continuously revised this year as a result, with some analysts now expecting gold to reach $4,000 an ounce.
The thing that gold buyers want to know, however, is whether this bull run is sustainable?
Silver is making a bull run too, so this isn’t just something that’s confined to gold. It appears to be the result of safe haven buying, as more and more people are growing uneasy about the future of the economy.
But will gold continue hitting record highs? Will we see profit-taking starting to weigh on the gold price? Or could gold perform like it did from 2008 to 2011 when the gold price rose nearly 300%?
One of the biggest drivers of the gold price in recent years has been the relentless pace of central bank gold purchases. These purchases have accounted for as much as 24% of overall gold purchases in recent years.
But now that gold prices have risen over 40% this year, the pace of those gold purchases has been decreasing. In the first half of the year central banks added over 400 tonnes of gold to their holdings, while in the beginning of July that demand fell to nearly zero.
In a way, that makes gold’s record price growth in recent months even more amazing, as one of its biggest drivers has been weakening. But that helps to underscore the fact that safe haven demand for gold is growing, helping boost the gold price along with it.
You may remember that back in August there was a big brouhaha over the US slapping tariffs on certain imports of gold bars, particularly those produced by Switzerland. That was a problem because the types of gold bars Switzerland exported to the US were the size favored by New York gold markets.
Despite the Trump administration stating that those tariffs wouldn’t apply to Swiss gold, Swiss gold exports to the US nonetheless fell 99% in August. But Swiss gold exports to China increased by over 350%.
Will this be a one-off month, or will this pattern continue into September and even further into the future? If it does become a pattern, how could Chinese gold markets continue to benefit from this?
London and New York have been centers of gold buying and gold pricing for years. But if tariffs or the threat of tariffs on gold ends up permanently impacting gold trade patterns, could we end up in a few years paying more attention to Shanghai gold prices than to London and New York prices?
With regard to that last point, it’s worth noting that China continues to accumulate gold. China is already the world’s largest gold producer and largest gold consumer.
The Chinese government has made continued steady purchases of gold for years, while the Chinese people continue to purchase gold as a safe haven asset and store of value.
While Chinese official gold holdings are still far below those of the US, some people believe that the Chinese government’s official numbers are being underreported. And even if they are true, if this trend of gold purchasing continues, the Chinese could eventually catch up to or exceed American gold holdings.
Like it or not, Chinese gold demand has become increasingly important in world gold markets, with Chinese buying patterns helping to drive gold prices upward. So when trying to forecast gold demand or gold prices, we can no longer look just to what is happening in Western economies, but to what is happening in China as well.
Many Americans are understandably worried about the future of the US economy, as well as the state of their own finances. And they’re looking to safe havens like gold to help safeguard them against the potential of economic harm that could result from a nationwide downturn.
You can add safe haven assets like gold to your portfolio too, whether you choose to make direct cash purchases of gold or choose to buy gold with a gold IRA.
Gold IRAs can be funded with a tax-free rollover from existing retirement accounts such as a 401(k), 403(b), TSP, or IRA, allowing you to purchase gold coins or gold bars with your existing retirement savings.
No matter how you decide to buy gold, Goldco has options available to you. We have helped thousands of Americans benefit from owning gold, and our dedicated precious metals specialists can answer any questions you may have about the precious metals purchase process.
With over $3 billion in precious metals placements and over 7,000 5-star reviews from our customers, Goldco has worked hard to make ourselves one of the best gold companies in the country.
If you’re worried about the future of the economy and want to explore your safe haven options, call Goldco today to learn more about how gold can help you achieve your aims.
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