At times of financial and political uncertainty, the majority of experienced investors tend to diversify their options by investing in gold.
The gold markets are always an area of investing interest when an investor is looking for the best ways of protecting their funds during times when the stock market can take large leaps up and drastic falls downward. COVID-19 has made the majority of markets even more volatile as the fears over a second wave of infections moving through Australia and the major markets of the world.
The Australian commodities markets and major companies linked to the ASX200 have seen high earnings over the last few years with the volatility causing gold bullion to become one of the most important areas for investors. The Australian markets have seen its top five earners in early July include precious metals mining specialists and gold refineries such as ABC Refinery and Perth Mint, who are ramping up production to help meet the needs of investors and central banks.
Throughout the history of the financial markets in Australia and beyond, investors have always looked to precious metals as a good bet during times of economic concern. COVID-19 has seen the almost complete shutdown of the global economy leading to the development of a volatile stock market for almost every major economy. From Australia to the U.S., the chances of volatility have remained high as many investors begin to fear another lockdown caused by a second wave of infections.
The risk of a second wave of infections has seen many investors look to develop their own strategy for avoiding the problems of losses due to the pandemic. The price of gold is reported to have skyrocketed in Australia and throughout the world, since the pandemic began with the World Health Organization declaring a worldwide emergency on March 12. The COVID-19 pandemic has seen the price of gold trade at a nine-year high by July 10, 2020.
The question facing the majority of Australian investors is what state the global economy will be income to the end of the pandemic. Some estimates are stating the COVID-19 crisis could continue for around two years after claims the hot summer months would have a positive impact on the number of new cases proved false, particularly in the U.S. The decision by central banks and major governments to pump stimulus money into the economy has led to major uncertainty for many investors. As the uncertainty over the future of the global economy continues investors are looking for a haven that will allow them to ride out the potential problems of the future. The effects of pumping trillions of dollars into the economy have left many investors wary of the potential for problems in the near future and when the pandemic comes to an end.
When the COVID-19 crisis caused the closure of international borders one of the areas that were affected was the ability of gold suppliers to move their products by air. COVID-19 has led to the belief there is a perceived shortage of physical gold around the world. This is not the case, but it has driven the gold markets of Australia to new highs because of the backlog of gold waiting to be shipped around the world.
As soon as the COVID-19 crisis began, there was talk of major investors looking to gold bullion as a way of protecting their investments. Some gold refineries in Australia have added shifts to their production facilities in a bid to keep up with the demands for their products in the present and the coming months and years.