According to 61% of US population, a majority of consumers are stockpiling supplies and looking for safer ways to protect their money.
Additionally, 52% of consumers have also stockpiled food or essential goods in anticipation of social unrest tied to a resurgence of COVID-19 in the coming months and/ or the election.
Reliable Store of Value
No matter your political views, the dollar does not takes sides. It only reacts to underlying conditions. With the upcoming election (and the many threats made by President Trump himself) combined with a third wave of the coronavirus pandemic on the horizon, it’s uncertain when the world will fully recover.
Fearing a worst case scenario regarding Civil War, gold is historically and statistically a “safe haven” for those looking for shelter from more traditionally volatile and unpredictable investments, like stocks.
As the world’s earliest form of currency, gold has long been considered a reliable store of value. It is widely available enough to trade but finite enough in supply to make it much more rare and valuable than other metals
The price of gold (which is normally in dollars) moves in the opposite direction of printed money. This is because if the U.S. currency gains in value then it takes fewer dollars to purchase an ounce of gold.
In March, just before the pandemic hit, the U.S. Federal Reserve cut interest rates to zero a and there was less incentive for many to hold dollars. Cutting interest rates meant the already low returns that investors received from investing in debt, or bonds, were nudged even lower. Since then, gold has regained popularity, with its price climbing back up to its highest point in nearly seven years at $1878,95 per ounce.
The virus has forced more and more mines to close, shortening the supply of precious metal, bolstering its price,” pointed out Sheridan Admans, investment manager at U.K. stockbroker The Share Centre.
And as banks print more money to stimulate the economy, many fear this will ultimately result in inflation and likely impact the value of other assets.
Meanwhile, historically, gold over a long period of time tends to hold its value in real terms and is considered by most financial experts to be a “refuge” against this risk.