WITH cities empty as the coronavirus rages across the globe, most people are not just focusing on survival but also their financial future, yet this could be put on sounder footing with investment in gold as suggested by an expert who sees it reaching $5,000 an ounce in a few years.
US sadly recorded the most coronavirus deaths in a single day yesterday (7.4.2020) with more than 1,800 fatalities. This takes the death toll to nearly 13,000 and this country now has over than 398,000 confirmed cases, the highest number in the world. Global cases have exceeded 1.4 million, BBC quoted Johns Hopkins University as saying.
Meanwhile in Thailand there were three additional deaths from this viral infection over past 24 hours, taking the total so far to 30, while 111 new cases pushed the total to 2,369, with patients spread across 67 provinces, PostToday reported.
Helping people who are not just concerned about staying physically safe but also having enough money to live on if they do emerge unscathed from the pandemic is one economist who believes gold is the best bet as it is cheap right now and could reach $5,000 in medium term.
Kitco News quoted John Butler, author of “The Golden Revolution,” as saying that gold prices could climb to $5,000 in a few years as loose monetary and fiscal policies drag on to cope with the impact of Covid-19 and also to go by its historic performance during periods of declining economic growth
“Based on the historical pattern of the 1970s, and stagflation, and other times these sorts of things have come about, I think gold is going to rise, by orders of magnitude,” Butler told Bilal Hafeez on the Macro Hive podcast. “I think it is perfectly realistic to see gold closer to $5,000 than where it is today in a few years’ time.”
In the international market, spot gold was today last seen trading at $1,648.84 per ounce, having risen to its highest since March 10 on Tuesday at $1,671.40, Ndtv.com reported
Meanwhile Thai Gold Traders Association set today’s buying price of one baht weight gold bar at 25,200.00 baht and selling price 25,400.00 while the buying price of ornament gold was fixed 24,741.12 and selling price 25,900.00.
On the lasting effects that the pandemic will leave on the economy, Butler said that policy reforms are here to stay.
“Politicians jump on whatever opportunity to try and push their pet agenda forward, and in some cases, it might be a very well-meaning program and in other cases it might be a way to try to increase their power and influence. I see all of the above right now,” he said. “The other thing is what Milton Friedman said decades ago, [which is that] there is nothing more permanent than a temporary emergency government program.”
Meanwhile an interesting Forbes article published last week says that the coronavirus global pandemic is the black swan of all black swans.
Countries around the world are rolling out wartime-like emergency measures to fight Covid-19. Estimates by the Organisation for Economic Co-operation and Development (OECD) suggest that measures to curb the spread of the virus will cause economic output to decline between 20% and 25%.
As investors have been clamoring for the safety of haven assets amid the recent market volatility, the US dollar has been the king of the global foreign exchange market. But gold is actually outperforming against the greenback. According to Bloomberg data, gold has risen 5.3% so far this year and may go higher still.
Gold has been in short supply recently because it’s usually shipped on commercial flights that have been curtailed recently, although Russia’s central bank is taking some of the pressure off. The country’s central bank just announced that it would suspend gold buying in its domestic market starting April 1, Reuters reported, citing IFAX news agency.
“Further decisions on gold purchases will depend on how the situation develops,” the Russian central bank said.
Russia’s central bank is among the largest holders of gold in the world. In December, Russia’s Finance Minister Anton Siluanov said his country could consider investing part of its National Wealth Fund in gold as the country sees investment in the precious metal as more sustainable in the long-term than in financial assets.
The deadly virus is perhaps one of the worst things that could have happened to an over-levered credit system in a late stage economic cycle. Going into the pandemic, we had built an equity and debt bubble of historic proportions., the Forbes article said
A sparkling US Treasury gold bar. Photo: Michael Mandiberg
By Nina Suebsukcharoen