Gold thrives in uncertain times. When the economy falls, people lose their jobs and currencies lose their value, the price of gold goes up. Let’s look back to the Great Depression. During that time stocks lost their value, people lost their jobs, their houses and their savings. It was a bleak time in history and politicians vowed that it would never happen again. Here we are, facing a worldwide pandemic and we seem to be worse. In America, more than 33 million people have lost their jobs, this is double the amount of people who were jobless in the Great Depression. There are more people lining up for food today and than there ever was. At the moment, everyone is dealing with the health crisis but we have yet to deal with the aftermath, the devastation of the economy, people’s livelihoods, and more.
At the beginning of the Great Depression, the stock market rallied to 50% before losing 90% over three years. Analysts have been looking back at moments like the great depression for clues of what the future may look like after Covid-19, but that exercise is futile because of the dominant presence of the Federal Reserve. There might be similarities between what is happening now with Covid-19 and what happened during the Great Depression like the fact that more people are selling their gold bars, gold coins, gold jewellery and virtually any gold items they have to gold buyers all over the world.
The Federal Reserve and government have taken a different fiscal policy to deal with the corona virus crisis. They have bailed out everything and everyone to prevent the economy from seizing up. It seems that they have adopted a “whatever it takes” stance to deal with these desperate times. The economic costs of dealing with Covid-19 keep piling up and countries are taking on more debt than ever before. Central banks all over the world are injecting trillions in bridge financing to stop a total decimation of their economies. The U.S is set to borrow $4.5 trillion. In a move to save the U.S economy the Fed has pledged to buy more government debt as well as some risky high-yield corporate debt. The bailouts estimated at over 15% of the GDP are higher than the World War II levels. The problem is that these bailouts are meant to buy more time while scientist scramble to find a vaccine and treatment. This could take more time than we think and the virus could actually outlast the bailouts. This could mean hard times will last for a while longer. What should you then do to meet your daily financial obligations? We will emerge from the pandemic at some point but it will take some time for the world to return to pre-Covid-19 level but it you have gold jewellery to sell like an engagement ring you have no more use for, or some jewellery you inherited this would be the best time to turn to that gold. The price of gold has hit 7-year highs. If the Corona virus pandemic persists or the second more deadly wave occurs, gold will rise and if a vaccine is found, gold will still rise even higher on the hangover of the cure. This might be the best time for you to get the best deal for your gold from a number of gold buyers.