Reasons Why We Love Gold Price Investment in 2020

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Gold Price Investment in 2020

Gold as Investment is most popular due to a regular increase in Gold price. Indian Gold imports slumped by about 99% for a second straight month in May 2020, due to restrictions to control the corona-virus pandemic (Covid-19) outbreak in the world’s second-biggest consuming nation.

Inbound Gold shipments fell to 1.3 tons last month from 105.8 tons a year earlier, according to a person familiar with the data, who asked not to be identified as the information isn’t public. That comes after shipments plunged to 60 kilograms in April, the lowest monthly imports in at least a decade.

india lockdown

Indian Gold Market

India has slowly started easing a nationwide lockdown that has grounded airlines and battered the economy since it was imposed on March 25. Still, jewelers aren’t optimistic about demand picking up before September at the earliest as financial stress remains elevated and local gold prices hover near record highs.

Imports by India have slumped by more than 80% during the first five months of 2020 to 75.46 tons, according to data compiled by Bloomberg. Titan Co., India’s biggest jeweler by market value, Monday said its income from the jewelry unit fell nearly 6% in the three months ended March, with a significant hit to sales in the second half of March as all stores were shut because of virus-related curbs.

For the past three months, investors have been taken for quite the ride due to the pandemic Coronavirus. It affects the economic market very badly and the Stock market Indices all around the world are bleeding badly.

 

Gold vs dollar

The pandemic in the U.S. affects nearly 40million people life as the peoples are losing their jobs and jobless claim data increase regularly. During the month of May 2020, It’s the fastest bear-market correction Wall Street has ever witnessed.

In a broader sense, few sectors and industries have been spared from this weakness. But amid this market malaise, one industry is shining brighter than ever is gold mining.

 

Gold price

View of Gold Strategists

A stack of gold ingots set on a one-hundred-dollar bill, next to Ben Franklin’s face. In recent years, that’s not been a problem. The per-ounce price for physical gold has risen by $460 over the past year and around $670 an ounce since bottoming out in early 2016. Recently, the shiny yellow metal closed at a seven-year high, well above $1,700 an ounce.

One reason Gold Price Investment has been virtually unstoppable of late is that global bond yields are plunging. There are trillions of dollars in negative-yielding bonds worldwide, with plenty of other positive-yielding bonds liable to produce real-money losses once inflation is factored in. With investors having fewer opportunities to generate guaranteed real income, gold is suddenly being viewed as the logical store of value for the foreseeable future.

Another reason gold has taken off is the exceptionally dovish policy of the U.S. And global central banks. Earlier this year, the Federal Reserve lowered its federal fund’s target rate back to a record-tying low of 0% to 0.25% to encourage lending. The U.S. Central bank also promised an unlimited amount of quantitative easing in an effort to assuage market fears.

We’ve even witnessed supply shortages manifest for physical gold in recent months. Supply-and-demand economics would suggest that if demand outweighs the supply of a product, the price will increase until such time as demand tapers.

 

gold mining

Profit-making by Gold mining industry (Is History repeating of 2012-2014)

Gold-mining stock balance sheets are much improved. However, buying physical gold isn’t the smartest way to take advantage of rising spot prices. Instead, buying into gold-mining stocks. Which may offer a dividend and are able to leverage a rise in the underlying price of gold. It is the best move you can make.

Between 2010 and 2012, gold-mining companies piled on debt, ramped up exploration, and advanced a vast majority of their projects. With gold rocketing from $800 an ounce to as much as $1,900 an ounce between 2009 and 2011. The precious metal riding (at the time) a more-than-decade-long win streak, miners probably felt invincible. Then gold proceeded to lose more than $800 an ounce over the course of the next four years, and overleveraged companies paid the price.

But over the past five years, we’ve seen a real resurgence of common sense in the mining industry. Companies have been diligently reducing their debt loads, all while advancing only the most profitable projects. In many respects, all-in sustaining costs (AISC) have declined for gold stocks, while financial flexibility has improved.

Take industry giant Barrick Gold as a perfect example. This is a company that, as of the end of 2014, had approximately $13 billion in total debt. However, following multiple asset sales, the Randgold acquisition, and utilizing its operating cash flow to pay down debt. Barrick Gold today has around $5.2 billion in total debt. which is less than $1.9 billion in net debt. It generated $3.2 billion in operating cash flow over the trailing-12-month period. Barrick’s balance sheet went from being a serious liability to no longer being a concern.

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