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Coronavirus Update: “Extreme Fear” Could Push Gold to Record

Posted By Isaac Nuriani |

A couple of weeks ago, the S&P 500 fell into stomach-roiling correction territory in the fastest time ever – just six trading sessions. On Thursday, the Dow Jones Industrial Average experienced its worst single day since the 1987 market crash. All major indexes are now into bear markets. Bond yields are collapsing and a full-scale oil price war between producers is in effect. In case you were wondering, this fearsome rollercoaster ride based on the coronavirus fear doesn’t look to be ending anytime soon.

The outright panic ensuing from the COVID-19 coronavirus outbreak is the driver of all market activity right now. Whether that’s justified or not isn’t the point. Panic is not something the prudent retirement saver should try to make sense of. What he or she should do is recognize the destructive potential and take steps to limit – even offset – the damage.

One smart step to consider right now is the addition of gold to your portfolio. The case for gold is particularly good right now. It’s based on more than the metal’s worldwide reputation as a reliable safe haven. The coronavirus carnage all but assures the Federal Reserve will have to resort to hyper-accommodative monetary policy throughout at least the rest of this year. The application of that kind of policy can benefit gold in two important ways.

First, interest-bearing “paper” assets that are normally seen as safe havens will have little to offer savers. The rock-solid reliability and tangibility of a genuine safe-haven asset such as gold will look more attractive, by comparison.

Second, with lower interest rates and associated drastic monetary policy measures comes a weaker dollar. Gold’s standard reaction is to rise when that happens.

The “perfect storm” brewing right now could energize gold to never-before-seen heights this year. Predictions of 2,000-dollar-per-ounce gold were being made before the coronavirus outbreak hit the news. Now that a coronavirus pandemic is upon us, more experts project a new all-time high for gold in 2020.

Analyst: “High Uncertainty” over Coronavirus Strengthens Case for Gold

Earlier this year, Greg Jensen of Bridgewater Associates, the world’s largest hedge fund, said gold could rise to 2,000 dollars per ounce in 2020. His reasoning was based on a mix of negative economic and political factors. The coronavirus outbreak was just a blip on the radar screen when he made that call.

Coronavirus is a blip no longer. As a result, more analysts are going “all in” on the idea that a big year is in store for gold.

Clark Fenton of global asset manager RWC Partners is one who sees gold soaring for the remainder of this year. In a recent Markets Insider article, Fenton says the safe-haven view of gold will be one reason it enjoys a strong 2020. He also thinks the coronavirus-prompted intervention of the Federal Reserve in monetary policy will be a boon for the metal’s price.

“Gold could go through 2,000 dollars this year, especially post the Federal Reserve’s emergency action last week and the follow-through we expect from them,” Fenton said in a recent research note. He added that while “it may look like gold has already rallied strongly … we think it has a long way to go from here.” Part of Fenton’s reasoning is rooted in the fact gold “is commonly viewed as a safe haven.” It is also based in his belief that “the world has now changed fundamentally. We’ve never seen real rates this low globally.”

According to the same Markets Insider piece, money manager Adrian Lowcock believes 2,000-dollar gold is realistic considering the panic guiding markets right now. “What we can see is the level of fear in markets is at extremes we haven’t seen since the financial crisis and there is very little financial institutions and professional investors can do or say in the short term to reassure markets.” Lowcock believes the near-term deterioration in markets could prompt gold to “break through the 2,000-dollar level” this year.

And in a research note last week, UBS strategist Joni Teves suggested coronavirus will make 2020 a robust year for gold. “Monetary policy is easing globally, with the Fed widely expected to cut rates further,” said Teves. “Uncertainty remains high as the global economy contends with the COVID-19 outbreak. If anything, we think the rationale for holding gold is becoming even stronger.”

Add Gold to Subtract Volatility from Your Portfolio

The COVID-19 outbreak is part of the gold narrative now. The prospects of both how far markets could fall and how high gold could rise in 2020 are compelling. Have you had enough of the volatility in your portfolio? Are you intrigued by the prospect of gold rising an additional 25% this year from present levels? If your answer to either question is “yes,” call Augusta Precious Metals at 800-700-1008.

When you contact Augusta, you’ll speak to a friendly and knowledgeable customer success agent. This team member is well-versed in all the threats to your portfolio, including those arising from the ongoing pandemic. Ask all the questions you want about buying gold and silver. We love talking about precious metals, and we really love helping retirement savers protect their hard-earned money. Eligible callers will receive our free, informative guide on retirement account protection. Also, be sure to ask about our live webinar: the Profit & Protect Web Conference hosted by chief economic analyst and Harvard Business School member Devlyn Steele.

It has already been a year to remember for retirement savers – and the year is just beginning. Don’t wait to take the simple steps that can help reverse the worrisome fortunes of your portfolio. Contact Augusta today.

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