Gold Pushes to All-Time Highs

While high-flying stock markets may be getting most of the press recently, gold too is hitting all-time highs, exceeding $2,160 an ounce. You may be wondering why both gold and stock markets are hitting all-time highs at the same time. After all, aren’t stocks and gold supposed to be negatively correlated?

Well, it’s certainly true that gold often does well when stocks don’t, but that doesn’t mean that both stocks and gold can’t both do well. And many people watching what’s happening in markets today think this could be the beginning of another tremendous bull market for gold.

The Push Behind Gold

Gold’s surge started late last year, as gold hit all-time highs before pulling back. This year gold had been trading between $2,000 and $2,050 an ounce for a while, not really wanting to break out.

But now gold seems to have hit its stride and is hitting new all-time highs. And there are two primary reasons why that’s happening.

Safe Haven Buying

One of the biggest drivers behind the gold price’s growth is the surge in safe haven buying. Gold demand has been strong ever since 2020, but last year’s bank failures really led to a surge in gold demand from people looking to protect their assets with gold.

The urgency of last year’s bank failures wore off by the end of 2023, but a year on from those failures, we’re seeing new weakness in the banking system. One of the rescuing banks from last year’s mini-crisis now finds itself in significant trouble, in need of a new injection of capital.

Whether that will be enough to save it from failure remains to be seen, but if NYCB fails, it could bring all the same fears that surged through markets last year.

Could it be the catalyst that finally bursts the stock market bubble, or that finally gets the Fed to start lowering interest rates or returning to quantitative easing?

That too is difficult to forecast, but it’s not out of the question that another bank failure could lead to instability in financial markets and speed up the arrival of the next recession. And if NYCB fails, it could push the gold price even higher than it is today.

Central Bank Gold Purchases

One of the other major factors behind the continued strength in gold prices is the fact that central banks continue to add gold to their holdings. Central banks are still buying gold at rates that were unheard of years ago, and they show no signs of slowing down.

Some countries, like Russia and China, are rumored to be buying gold in order to develop a gold-backed international currency to replace the dollar. Others, smaller countries, are likely adding gold to their holdings in order to provide themselves with more assets in the event of another financial crisis.

Not every central bank in the world has the ability of the Federal Reserve to print money ad nauseam with minimal repercussions, and not every country has the ability to spend trillions of dollars it doesn’t have and sell its debt readily to investors.

For those countries and central banks that are impacted by market forces and not those that can impact markets, buying gold makes sense as a strategy to shore up their assets and provide themselves with a source of real wealth in the event that the world goes topsy turvy.

What Does the Future Hold for Gold?

With inflation that’s still running higher than the Federal Reserve would like it too, a threat of ongoing banking system weakness, and tech stocks that look similar to the top of the dotcom bubble, this year could be a very interesting one for markets.

Many Americans are looking at what’s going on in financial markets and are worried that we could see a repeat of the dotcom bust, or 2008, or both combined. Add into the mix continued geopolitical unrest in the Middle East, a continuing war in Ukraine, a troubled Chinese economy, and recessions in Germany, Japan, and the UK, and you have a recipe for a very tough time ahead for the economy.

It’s no wonder then that so many people are looking to protect themselves and their financial well-being, and that so many people are looking to gold to do that. Gold has served as a safe haven asset, a store of wealth, and an inflation hedge for centuries.

Many people looked at what gold did during the 2008 crisis, when it gained 25 percent while markets lost over 50 percent (October 2007 to March 2009). How many people watched their hard-earned savings deteriorate back then, only to watch gold take off and continue setting all-time highs until 2011?

Perhaps many of the people buying gold today are those who saw what happened back then, and are determined not to repeat the same mistakes that hurt them in 2008. Whenever the next recession comes, we can’t say we haven’t been warned, as the red flags have been flying for a long time already.

At some point people have to decide for themselves when they think markets are going to turn, and take steps to defend their financial well-being. Many have done that already, but many more are probably still sitting on the sidelines, hoping that the economy will shrug off predictions of recession.

If you haven’t protected yourself yet, what are you waiting for? Do you want to leave your assets undefended in the event of a 2008-style financial crisis? Can you afford to lose decades of hard work, saving, and investing, losses that could take you years to recover from?

Even if you haven’t thought of gold before now, it can’t hurt to learn more about how gold can help you safeguard your savings. From direct cash purchases of gold coins and bars to tax-free rollovers to a gold IRA, there are numerous ways to put gold to work for you.

With over 5,000 5-star reviews and over $2 billion in precious metals placements, Goldco works hard to provide our customers with quality gold products and outstanding customer service. Call Goldco today to learn more about how gold can protect your financial security, and why our customers consistently rate us one of the best gold companies in the business.