Over the last few days, we’ve all witnessed gold breaking over the $1600 mark as stocks suffer significant losses. There is a lot of nervousness in the market which is one of the reasons why gold breaks over the 1600 mark, and people are putting gold and silver into their portfolios.
Why Gold Breaks Over the 1600 Mark
In the meantime, the US dollar is actually strengthening against both the Euro and the Japanese Yen. Investors see the dollar as a safe haven trade, as people move into the dollar and into the US equity market. In this market condition, there is a headwind for precious metals, especially gold.
The Coronavirus Threatens the Global Economy
The coronavirus has caused an unprecedented economic slowdown with investors rushing into gold to safeguard their investments. The market did not take seriously the effects of the coronavirus early and only recently came to terms with the massive threat it poses to the global economy.
A few days ago the Chinese finally admitted that their GDP is going to get hammered in the first quarter. The market now is taking this seriously. If this continues for very much longer it will have a devastating impact on global growth which will put all the central banks including the FED on full monetary easing policy and that reality is starting potentially to sink in.
More Reasons for the Gold Rally
In addition, the coronavirus is just the tip of the iceberg. There are many reasons for the price of gold to hit the roof apart from the Wuhan virus.
- The overvalued stock market will have to correct itself sooner or later
- The upcoming recession that is been held up by the FED
- The war on cash with the Europeans continuing their negative interest rates policy
- The low bond yields
- The global debt bubble
- Middle East tensions in Syria escalade
Conclusion
The metals, gold, and silver, continue to charge higher with parabolic moves and heavy volume. In my opinion, it will be healthy for gold to see a pullback, to allow some profit-taking if this is going to be a bull market. All the signs are there for the rally to continue, we are bullish on gold and silver.
This is really interesting, I did not know that the coronavirus was taking effect on stocks in this way. I guess I never really thought of how the stock market can be effected by changes like these. It’s certainly something to think about.
It makes more and more sense why people are always there to buy your gold for cash, lol!
Yes, unfortunately the coronavirus is affecting stocks along with global growth. There is a significant decrease in tourism from China and many countries depend on Chinese tourists. Also Chinese manufacturing is idle at the moment as factories have been shut in order to stop the spreading of the virus. Thanks for the comment.
Thank you for sharing this informative article about Gold Breaks Over the 1600 Mark. I do not know much about the nervousness in the market and people are putting gold and silver into their portfolios but I do know that the Coronavirus threatens the Global Economy and it is affecting everyone. l am based in South Africa and we are a health organization with the out break we can not trade not even medicine to other countries without them asking if the medication is made in China or is related to China in any how, there are forms we have to fill in first before we can ship anything to any part of Africa. We also stopped our tradings with Europe as we get most of our clinical laboratory products from there due to this Coronavirus. Thank you for sharing this and making people aware of how serious this is and have a huge impact in Global economy. I will share your post with my colleagues.
Wishing you all the best!
There is a large concern in global economy about the effects of the coronavirus in world economy. In China factories do not work as there fears of the virus spreading. English car manufacturers complain they will run out of car parts and Apple is also facing similar problems.
Hi, There.
Thanks for sharing your thoughts on Gold breaking the 1600 marks. The reasons mentioned by you are obvious. The shift to unplug the real situations around the world causing a shift in the mindset and the trend of investors. Investment in Gold has always been the safest bet.
Warm Regards,
Gaurav Gaur
Over the years gold has been the safe heaven during hard times. A down to earth investor always has a percentage of his portfolio invested into gold. Thanks for taking the time to comment.
I could be wrong but I don’t think its smart to just only invest in gold because it’s risky but I think this is the right time to invest in gold. With the stock market falling as well as the virus outbreak, investors are threatened and putting gold into their portfolios is the safer option. So is investing in gold better than investing in silver?
Thank you for sharing and allowing us to discuss this topic.
Best option is to have an 8 to 10 percent of the portfolio invested into gold. If the investor thinks gold is about to rally then he can increase his investment to 15 or even 20 percent. Although there has been investors with a 30% of their portfolio invested into gold. Silver is a good investment too as it tends to follow gold. Usually with one ounce of gold you can buy 60 ounes of silver. However, at this moment the ratio between gold and silver is 90. Silver seems to be a good bet at the moment as it hasn’t followed gold’s rally in the last week. But I still think gold is a better option at the moment.
hello, it is a great and nice feeling to know that someone will create a great website like this and also create a write up on an article like this. this is a huge tip and it is best to act now with investment and be wise about it. i need to do some more research and then invest wisely. thank you
Thanks for your kind words, Before every investment it is best to do your own research. It is your hard erned money after all. Always invest long term and make sure you don’t put all eggs in the same basket.Regards.