Supply & demand

A number of Reddit users on the popular r/WallStreetBets forum have said they are planning to launch a coordinated effort to target silver as their next short-squeeze target.

Gold and silver closed out their best years since 2010 following a year of unprecedented volatility brought on by the Covid-19 pandemic. What are the various factors that could influence the price of gold in 2021 ?

As indicated in my article of September 25, during a bull market, there are systematic corrections of the order of -20% on gold and -30% on silver. Since peaking at just over $2000 per ounce at the end of July, gold has corrected by -14%.

The bull market for gold is not over, Goldman Sachs analysts said, and the gold market will likely follow the same path as it did after the global financial crisis in 2008.

Strong growth in global investment demand for gold in Q3 partly offset weakness elsewhere as COVID-19 remained in the driving seat.

The history of gold bull markets (1971–80 and 1999–2011) shows that the most powerful gains come toward the end of the bull market, not at the beginning.

I suggest you buy your gold at current levels and ride the wave up to much higher levels. It’ll protect your wealth in the days ahead. Like every market, it will fluctuate. Nothing goes up in a straight line. But you want to focus on the longer term picture. And it looks very bright for gold.

Morgan’s observation that “Money is gold, and nothing else,” was right in two respects. The first and most obvious is that gold is a form of money. The second and more subtle point, revealed in the phrase, “and nothing else,” was that other instruments purporting to be money were really forms of credit unless they were redeemable into physical gold.

Gold will always be worth something, whereas no one knows what a French treasury bond will be worth in 10- or 20-years’ time. Perhaps as much as a bond from Argentina, Greece or Venezuela? The slogan is therefore simple: French rentiers unite, sell your bonds and buy gold.

Central banks can base their investment strategy on many factors, but the main reasons for recent gold purchases remain increased economic and political risks, as well as low and negative interest rates.