The New Gold RushPaul-Martin Foss
Many investors may have been looking worriedly at the gold price over the past couple of weeks, seeing the price decline back to where it began the year. They may have been second-guessing their decision to invest in gold, wondering if it was really such a good idea after all. But events this week had to have restored their trust in gold. And some of those events are forecasting an especially bullish market for gold in the coming weeks.
We’ve written before about how gold often declines in price during the early stages of a crisis. That’s because many institutional holders of gold, such as investment firms, hedge funds, ETFs, etc., end up selling gold as a result of investors looking to drum up cash. They have bills and expenses to pay, and have to sell assets to get money to pay them. So they sell assets like gold that are easily liquidated. But as financial crises progress, gold begins to climb, and never looks back.
Right now there is major disturbance in gold markets, as the spreads between gold futures and the gold spot price, which are normally pretty small, have exploded. In fact, gold futures have traded this week anywhere from $20 to nearly $100 higher than spot gold. And if you’ve tried to buy a gold coin or two, you’ll know that many gold dealers have been cleaned out of their inventory. The rush to buy gold has gotten so great that the physical inventory of coins available on the market has been greatly diminished.
On Tuesday, gold had one of its best days ever, gaining more than $80 an ounce on that greatly increased demand. And with the effects of the coronavirus yet to hit stock markets hard, the gold price should only continue to increase as more and more investors decide to buy gold. With futures prices so much higher than spot prices, the likelihood for gold to hit $1,700 or even $1,800 in the coming months is incredibly high.
If you’re looking at protecting your retirement assets, have you looked at investing in a gold IRA yet? With a gold IRA, you can use existing retirement savings to invest in gold, silver, or other precious metals. And rolling over those savings from a 401(k), IRA, or TSP account into a gold IRA is simple, painless, and can be easily done without any tax consequences. If you haven’t invested in gold yet, now’s the time to do it, before the gold price really takes off.