As the coronavirus wreaks havoc on the stock market, the gold price has not suffered the same losses as the Dow Jones and S&P500. Instead, gold and silver saw record levels of demand over the past few weeks, even with fluctuating prices. The demand for precious metals has mostly increased. This creates what economists refer to as a Goldilocks Economy, and the future looks bright for the metals with Goldilocks gold and silver demand. Additionally, banknotes and numismatic coin markets are seeing high demand from buyers at this time. Investors seem to be keeping in mind the peak for COVID-19 and future inflation issues as they continue investing in safe-haven assets.
Goldilocks Gold Economy
Gold maintains its price highs, piggybacking off the fears of investors as they watch the continuing spread of COVID-19. Their appetites were sparked from the spread, and many pulled from the stock market to purchase precious metals. Silver futures aimed at 1.8% increase Monday morning. Gold was also up despite the US benchmark stock indexes rising from investors’ hopes that the worst of the virus has passed.
Analysts are calling this economy a Goldilocks economy for precious metals, particularly gold. A Goldilocks economy is one that sustains moderate growth and low inflation. People theorize the worst is yet to come for the economy because of inflation. Therefore, many are choosing to invest in gold right now before the economy plummets because precious metals carry their own value.
Gold and Silver Demand
Silver for May Futures was up 3.4% Monday morning during the NY open even though it faced a weekly decline of .3% last week. It closed at $14.98 an ounce last week, and reached a high of $15.405 on Monday for May Futures.
June Gold Futures reached a high of $1,715 per ounce on Monday, April 6, 2020. Previously, it opened at $1687.40 an ounce. Closing at or above this level reaches gold’s highest close since January 2013. The pattern for gold lately has people forecasting its price breaking past $1700 sooner than expected.
Peter Spina, CEO and President at GoldSeek.com, noted this could be because suppliers are restocking to try and meet the hunger of investors in the Goldilocks gold economy.
“The demand for physical gold remains strong in the West and physical deliveries from Comex is driving up the price in U.S. dollar terms to new records. The U.S. Dollar Index is above 100 and rising with the gold price. The key difference, the gold price is rising faster in terms of U.S. dollars.
“The consequences of negative rates in a liquidity rich environment will continue to fuel the gold price higher as sellers are less eager to sell to the more hungry buyers. [So the] march to $2,000 and beyond continues. Next stop is $1,700 now, with a move above kicking up the momentum buying-energy even more into a bullish state.”
COVID-19, Stock Market, and Oil
As the coronavirus shows signs of de-escalation, it reels investors back in. What still causes many to hold back from investing might be the unemployment rate. Economists still are not sure of the damage in the economy because data has not yet caught up. The data they do have, however, proves that unemployment actually reached a greater level than their worst-case scenario.
The good news is that COVID-19 has appeared to slow in Italy, Spain, and the US for now. 1.3 million people have been confirmed globally with the virus with just shy of 300,000 cases of recovery. Many predict, however, the worst is yet to come. There is an expected wave of COVID-19 deaths anticipated to hit NYC within the next few weeks before tapering off.
Stocks fell on Friday, but they soared today as investors reacted to the signs that COVID-19 appeared to be slowing in spread. Nymex crude oil prices were still weaker at $27.50/barrel. But, 10-Year US Treasury notes went up Monday from Friday by about 0.67%.
Coins and Banknotes
Goldilocks gold and silver prices were still up Monday despite the stock market rally, showing that many are still on defense with the economy. Most precious metals on Comex deliveries were up on Monday, except for palladium. Alongside this spike are coins and banknotes.
The coin and banknote markets are currently strong and do not show signs of decline. The volatility of the stock market recenters the focus of investors on precious metals, including collectibles. Last month, Stack’s Bowers Galleries sold over $45 Million worth of coins, currency, and bullion products. Many of these collectibles traded at record prices. Additionally, Paper Money Guaranty realized over $9 Million in March. 27 PMG-certified notes in the D Brent Pogue US currency collection surpassed $100,000 each. Furthermore, an 1863 $100 “Spread Eagle” Legal Tender Note graded PMG 65 Gem Uncirculated EPQ sold for over $400,000.
All this shows that the markets for US Coins and Banknotes have significant demand despite high prices. This seems to match the trends seen for the Golidlocks gold and silver economy. Ian Russel, President of Great Collections, noted that there does not appear to be any decline in interest now. Jeff Garrett seems to agree. As the former President of the ANA, Garrett noted that in uncertain times, people tend to invest in tangible assets. Therefore, NGC and PCGS are working to secure the safety of these products for investors ordering bullion items online.
The Goldilocks gold and silver demand could continue for some time, so it might be worthy to consider investing in precious metals products sooner instead of later. One economist, John Butler, even suggested that gold could reach $5,000 per ounce within a few years based on the historical pattern of gold and stagflation.
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