The Coronavirus has done an unprecedented amount of damage against the world’s economy, according to Goldman Sachs earlier this week.
Goldman Sachs: Advise To Buy The Backup Currency
The COVID-19 had made everyone lose their minds to overall fear, causing them to liquidate their various “Risky” holdings and then put them into safe-haven assets. Throughout most of history, precious metals have always acted as a hedge for investors during periods of an economic and geopolitical crisis. The COVID-19 pandemic is no exception.
Goldman Sachs was quick to tell its clients that they should buy this “currency of last resort” on Tuesday. As one would imagine, the firm’s word had gravitas, and many did so without its sage advice.
Up and Down The Market Goes
However, gold was hit amid the coronavirus market drop, as well, albeit to a lesser degree. Gold prices managed to drop a staggering 12% from its peak in early March, going down to $1,460 per troy ounce from an impressive $1,700. This is due to the same sentiment that caused the overall crash, with investors seeking out their hard cash over less liquid non-essential assets, gold included.
Goldman Sachs recommended buying gold alongside the Fed announcing on Monday that it would buy an unlimited amount of government bonds. The Fed had tasked Blackrock, an asset manager, to handle this matter. The move caused the mighty USD to drop and pushed precious metals into the green by over 4%.
A Smidgen Of Irony
The investment firm doubled down on its gold recommendation. According to Goldman, Gold is currently at an inflection point, and could potentially hit as much as $1,800 throughout the following 12 months’ time. With the strange sentiment-based system that the world’s market works with, this announcement that gold will reach a higher price inadvertently caused the price to go higher.
In an ironic twist of fate, as everyone starts buying up the gold, the gold itself had its industries shut down due to the very crisis causing the demand. Three of the world’s biggest gold refineries had announced on Monday that they would be forced to shut down in light of the COVID-19 threat. This is due to Switzerland, where the refineries are based in, mandating the shut down of all non-essential industries to try and stop the spread of the virus in the country. The gold refineries Argor-Heraeus, Pamp, and Valcambi have all been forced to shut down, as a result.