Precious metals prices are formed on international exchanges. Due to the epidemic of the virus, many dealers and funds were forced to sell part of their gold in order to cover losses on other assets from their investment portfolio. This led to a temporary decrease in the price of gold.
After a pause, the sellers of precious metals began to report a sharp increase in demand for investment gold in the form of coins and bullions. Yellow precious metal is a protective asset during times of crisis. Private investors love gold and trust it completely, as it was able to survive all previous crises.
Many people are afraid of a recession in the economy of their country, as a result of which the purchasing power of paper currencies will begin to decline. One should also be wary of a flood of financial markets with unsecured money that Central Banks create to maintain markets.
Sooner or later, the next crisis will come anyway, but one kilogram of gold will not lose its value. Demand for gold is supported by news that many refineries and mints have temporarily shut down to eliminate the risk of infection among their employees. This means that in the world the deficit of investment gold in the form of coins and bars will increase.
In the world, the supply chain of gold has been destroyed from deposits to refineries and mints and further to dealers in the sale of precious metals. This is due to the fact that most international flights were suspended, and the cost of freight transportation rose sharply. Some companies have to resort to charter flights.
For this reason, the price of physical gold has become very different from exchange. Therefore, dealers increased their markup on coins and bullion. When ordering investment products made of gold, investors should pay attention to the delivery time, since now they can be several weeks.
The main advice for investors is that the decision to purchase gold should be made on a “cold head”. Fear and panic are not the best advisors. Investing should be long-term, not speculative. Only in this case, the purchase of gold will make sense.