The price of gold rose 18% in 2019. But many who are bullish on the precious metal believe that the rise will continue in 2020. In fact, some see the price approaching $2,000 an ounce by the end of the year, shattering the all-time high of just above $1,900 an ounce set in 2011.
Major investment firms such as UBS, CPM Group, and State Street Global Advisory all see gold making new highs in 2020.
So why the optimism? Five key reasons have been identified as potential catalysts to push gold prices higher. They are, in no particular order 1. Key psychological resistance level is about to be broken; 2. The U.S. – China Trade Deal may not be signed; 3. The U.S. economy is weakening; 4. Key Islamic nations are ditching the dollar; and 5.Hoarding is on the rise. Other positives that could further fuel the rise are robust buying by central banks, a weakening of the U.S. dollar, and growing political tensions.
Investing in gold is unlike investing in the stocks of public companies. Gold has no underlying fundamentals and does not pay a quarterly dividend. Its value, in the truest sense, is determined by supply and demand. And when events occur, both domestically and internationally, the price of gold fluctuates as well.
There are many ways to invest in gold. Some investors like to buy and hold physical gold, in the form of coins and bars. Others prefer to own gold through exchange-traded funds.
An interesting yet small percentage of the United States population believe that an economic apocalypse is possible and believe they will be able to barter with gold. And still others like to own gold such as jewelry for non-financial reasons because they like to display it publicly.
The world we live in today is complex, tumultuous, and ever-changing. And events that happen around the globe are instantaneously reported and have an immediate effect on the price of gold. A dictator in North Korea threatens to launch a nuclear weapon and gold reacts. The American Embassy in Iraq is attacked and gold reacts. The United States drops bombs in Iran and gold reacts. The President of the United States is impeached and gold reacts.
Investing in gold carries risks. It is not very liquid and is price can be volatile. Riding the gold market roller coaster is not for the faint of heart. But what a ride it might be in 2020!