The “Great Unlock” Does Not Change the Case for Gold
This week, Your News to Know rounds up the latest top stories involving gold and the overall economy. Stories include: Why a quick economic recovery might not be around the corner, gold investors could be facing a buying opportunity, and auction of first U.S. gold coin could see a $15 million bid.
The return to normal might seem rapid, but the economic rebound could be anything but
Given the sheer amount of damage that the pandemic caused to the U.S. economy, many are hoping that the recovery will be as quick as the reopening of stores and businesses – especially given the stimulus that has been issued. Yet, as FXEmpire’s Arkadiusz Sieron points out, the lockdown wasn’t a wholly governmental measure from start to finish, and the opening could very much reflect that.
Instead, many shutdowns occurred on an individual level, with citizens and business owners testing out the waters. The reopening is likely to happen in similar fashion, leaving consumers with a need to re-acclimatize to their pre-lockdown routine and certain businesses to act in accord.
The notion of a V-shaped recovery has caused some tumult in the gold market and stirred up optimism for the first time in a while. Yet any doubters are forgetting that the metal was doing just as well prior to the pandemic, riding on a six-year high driven primarily by low or negative interest rates.
The domestic economy that everyone is eager to return to was sending off red flags and recessionary signals for a while, whereas the global economy had likewise been contracting. The sheer necessity to keep interest rates low or negative for the foreseeable future is essentially a guarantee of the same environment that has been supportive of gold, and persistent issues like sovereign debt, fiscal deficits and general uncertainty are more than likely to keep it there.
…click on the above link to read the rest of the article…
