How Are Gold and Silver Prices Doing?
Precious metals like gold and silver have been surging lately, as investors seek safe-haven investments on concerns the coronavirus will have a long-lasting, negative impact, on the global economy.
Investors are flocking to safe-haven investments like silver and gold. In fact, gold is currently trading at a seven-year high while silver continues to build on strong gains made since the start of 2019.
Last year, bullion prices advanced 18.5%, closing out 2019 at $1,523.10 per ounce. The gains were fueled by concerns about how a trade war with China would affect the U.S. economy. It also gained ground on political tensions in the Middle East.
Gold prices got an unexpected boost in early 2020 after it was announced a previously unknown virus in Wuhan, China began infecting people around the world. To date, the coronavirus, now known as COVID-19, has infected more than 80,000 people worldwide. A total of 2,635 people have died.
As of this writing, gold prices have climbed 8.6% year-to-date, to $1,652.10 per ounce, its highest levels in seven years. Silver prices are also showing signs of strength. In 2019, silver prices rallied more than 15%, ending the year at $17.92 per ounce. In 2020, silver prices have climbed 3.5% to $18.53 per ounce.
The broader stock markets are going the opposite direction. On Monday, February 24, the Dow Jones Industrial Average plunged close to 1,000 points after international health officials warned the coronavirus could cause a global pandemic. In Europe, markets experienced their biggest daily losses since mid-2016.
Why Do Investors Buy Safe-Haven Investments Like Gold and Silver?
Investors turn to so-called safe-haven investments like gold and silver and the U.S. dollar during economic downturns, political uncertainty, and periods of turmoil. That’s because gold and silver are not at risk of losing their value. This is in sharp contrast to fiat currencies and other assets that bear a credit risk.
Right now, there are fears that the coronavirus will become a pandemic. This could disrupt global supply chains and be devastating to the global economy. Which in turn, makes precious metals like gold and silver more attractive to yield-seeking investors.
Investors betting on a quick recovery from the coronavirus may be misguided. The coronavirus has been declared in the biggest global economies. In fact, four of the world’s biggest 12 economies, representing close to 30% of global GDP are working hard to contain the virus. A fifth, Germany, is on the brink of a recession.
In China, the rise of the coronavirus has dashed any hopes of a speedy economic recovery in 2020. The number of reported cases in South Korea, a major producer of electronics, cars, and machinery, is up. Japan has reported hundreds of infections. The number of coronavirus infections is also on the rise in the U.S. and Canada.
Uncontained, the coronavirus will wreak havoc on global supply chains which will hit corporate profits.
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Gold and silver prices have been bullish since the start of 2019, but because of growing concerns about the coronavirus and what it will do to the global economy, they are on an even stronger growth trajectory in 2020. Precious metals are not the only investments that go up during times of economic upheaval. For investors uncertain about what to do, the trading professionals at Learn-To-Trade.com can teach you how to protect and even grow your portfolio no matter what the broader markets are doing.
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