Even after investors sell off some of their gold to capitalize on their winnings, Harald Seiz, CEO and founder of Karatbars International, says the price of the precious metal will remain stable.(KFo)
After reaching all-time highs this month, there is has been an understandable adjustment of the gold price over the last few weeks. Gold and silver prices had been steadily rising since May, before gold took an 8% dive and silver ended up losing closer to 20%. But that trend was stopped abruptly. After the profit takers had satisfied their needs, it was time for the bargain hunters to make their move. “Buying at $ 1.850 – $ 1.900 seems unattractive, if not panicky.”, says Harald Seiz, but he thinks the current price level for gold is stable for the foreseeable future.
A mix of improving forecasts for the economy and government aid programs tug at gold in both directions
Gold will come under pressure as economic data for the United States and other industrialized countries improves over the next months, also contingent on a more probable than possible discovery of a cure for the Corona virus. At the same time governments will continue to introduce aid programs and pump money into the economy to increase purchasing power while risking inflation by doing so.
According to Seiz the one aspect that will have the gold price trending above 2.000 Dollars is the ongoing and lasting demand for the commodity. “If it weren’t for the basic regularities of the economy of supply-and-demand, we probably would be witnessing a slow downward spiral over the next couple of months.”, Seiz adds. People have internalized that the precious metal is a store of value that, if not a currency on its own merits, would survive the harshest economic crisis and be tradeable with any new government introduced currency.
Any plan is only as good as the gold you own
At the end of August the Economic Policy Symposium, the annual Central Bank summit, will take place, in a virtual setting because of the pandemic, in Jackson Hole, Wyoming. The symposium has had an impact on the gold price in the past, and the keynote speech by the Chairman of the Federal Reserve will be watched closely. This year’s title of the symposium is “Navigating the Decade Ahead: Implications for Monetary Policy”.
Harald Seiz commends bankers and economists for trying to lay out economic strategies for the future, but also warns that we’ve painfully witnessed this year that contingency plans are needed for unforeseen events as the one we’re living through currently.
Considering all these variables, Seiz is certain that gold will continue to be a valuable asset, because it allows risk averse investors to simultaneously participate in the stock markets and buttress their long-term financial security.
Disclaimer: This content does not necessarily represent the views of IWB.