One often heard question is whether it is a good time to invest in precious metals such as gold and silver. Depending on one’s expectations, the answer tot hat question is always the same. Felder Report’s Jesse Felder thinks the coming months will get very interesting for both markets.
The Future Gold Price Momentum
It is pertinent to understand the bigger picture before making any investment commitment. There are many different intricacies capable of shaping or disrupting market trends in very quick succession. That applies as much to precious metals as it does to any other financial asset on the market today.
During the first quarter of 2020, the gold price had some very interesting momentum. When everything is said and done, the precious metals held their own relatively well compared to other equities. Silver had a tougher time than gold itself, but that will not come to a surprise to many.
Jesse Felder, publisher of the Felder Report newsletter, is convinced this is a very bullish period for gold. More specifically, he expects the value of gold to surpass the 2011 all-time high with relative ease. That would certainly be something to behold, yet there is still a very large gap to overcome.
So far, it seems as if the vision of Jesse Felder may come true. Overall gold price volatility has decreased significantly, which can be interpreted as a bullish sign. With the value holding its own above $1,600 with relative ease, a push to higher levels remains within the realm of possibilities.
Stars Continue to Align for Gold
Several factors will help determine how investors look at the gold market altogether.
First of all, there is the gold-to-equity ratio. It depicts the overall market sentiment between gold and equity markets, to gauge which of the two is more likely to note an increase in value. In February of 2020, that ratio flipped in favor of gold, indicating the time to buy gold is now. By default, silver prices may benefit from this momentum at the same time.
Secondly, there is the amount of liquidity being brought into circulation all over the world. The fiscal deficit as a percent of GDP will rise strongly for all countries. It will create an unhealthy situation, and is often considered to be another bullish flag for gold and other precious metals.
Depending on when the coronavirus crisis is under control, more measures will need to be introduced all over the world. Keeping the global monetary system afloat will be very difficult, thus it remains to be seen what will happen to all assets and equities over the coming months.