Investors Return to Gold as a Safe Haven

The comments below are an edited and abridged synopsis of an article by Frank Holmes

Gold was the best-performing metal last week, up 5.56%. After getting hit with a coronavirus-driven sell off, gold rebounded on March 2 to retake its safe-haven status. Gold’s fundamentals remain strong, and near-term price corrections aren’t significant in terms of the bigger picture.

Investors Return to Gold as a Safe Haven | BullionBuzz
A pile of gold bars in storage

Holmes discusses gold’s strengths; market weaknesses; opportunities; and threats.

Treasury yields plummeted to record lows as demand for safe-haven assets grew due to the global health emergency economic fears. Long bond rates had their biggest intraday drop since 2009. A credit crisis is brewing as companies fear hurt income and the ability to repay debt.

As new information surfaces about COVID-19, it is hard to know what to believe. Two of President Trump’s aids said that the outbreak had been contained, even as the number of cases rose. Test kits remain in short supply. Larry Kudlow said the vast majority of Americans are not at risk for this virus; this contrasts with Marc Lipsitch, professor of epidemiology at Harvard and director of the Center for Communicable Disease Dynamics, who said that it is likely that 20% – 60% of people worldwide will eventually contract the virus. President Trump signed an $8.3 billion emergency coronavirus aid package; who will pay for it? Plunging interest rates and lower stock prices make it easier for the super-wealthy to pass billions of dollars to their descendants tax-free. One wealth advisor noted that their clients have more money than they ever could spend, and that the super wealthy could deploy sophisticated strategies to transfer the wealth to their dependents while protecting those fortunes from the IRS.

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