The Canadian investment back has suggested that gold will hold at current levels before it ascends to the expected $2000 plus threshold in a briefing this week – suggesting you should be ready to act on plans to buy gold before the next surge.
The bank’s analysts said in a briefing note that there are several factors which will hold gold before it surges up to the widely expected $2000 and beyond price point. Its strategists painted a very clear picture of what we can expect in the coming months, with a detailed outline of what the economic fallout from COVID-19 will be, expected policy action and the overall impact this will have on gold prices. Its analysis makes a very compelling case to buy gold now.
They say, “Before prices move into a significantly higher range, waiting is a significant risk,” the strategists said. “Somewhat higher real interest rates amid reduced systemic risk, the Fed’s commitment to positive policy rates, transitory disinflation, a firm USD, availability of physical metal to deliver against COMEX futures (which may soften the ‘gold shortage’ narrative, albeit misplaced) and a short appetite for equities are all reasons why the yellow metal will hold the trading range, before surging significantly higher.
“The resumption of the downward trend in real rates, which remain in negative territory, along with a low cost of carry and concerns surrounding fiat currency debasement as skyrocketing debt makes appealing various forms of debt jubilee in some circles, likely mean gold price could test TD Securities’ target of $2,000+/oz.
“It is highly likely that the post COVID-19 world will be vastly different than it was just a few months ago. It will be one where the economy is functioning at below potential, with high long-term unemployment and with governments who will want to solve these problems by spending trillions of dollars, which they do not have… In its quest to bring the economy to full employment, governments will continue to deficit spend, and central banks will allow inflation to move above their current targets of two percent. There is historic evidence that gold performs well when debt is skyrocketing. And, debt is at a record levels, with an extremely high probability it will reach much higher levels.”