The majority of bank experts believe that precious metals haven't yet exhausted their growth potential. The reason is that the amount in circulation cannot be increased quickly enough to satisfy new demand, unlike fiat currencies. Paper currency slowly depreciates due to central banks regularly printing more money.
In a recent report, JP Morgan analysts claimed that in the next few years, we are likely to witness a growing risk of currency devaluation, worsened by the monetary policies adopted to fight the consequences of COVID-19. Gold will come out as the only winner, so the experts recommend investors to gradually increase their gold positions, by buying every dip. The price of gold is moving to new record highs above $1,900 an ounce. The yellow metal has already reached new all-time highs relative to many major currencies; now, investors wait for the same to happen for XAU/USD.
Wells Fargo's John Lafarge spoke to Kitco News about the current situation in the global gold market. He said that the overall outlook has been positive since the start of the year and the rising trend will continue. The fundamentals will remain crucial, in particular, central banks' constant money-printing and low-interest rates.
Lafarge believes that one shouldn't expect gold to set a new price record against the dollar until the end of 2020. However, in 2021, gold might indeed rise over the September 2011 record of $1,921 an ounce.
Furthermore, according to the analyst, as soon as the price breaks through the $1,900 mark, it will start growing at a faster rate. In this context, investors should consider increasing their gold holdings. Another investment bank, BMO Capital Markets, believes that precious metal prices will be boosted by the policy of quantitative easing, and has adjusted its gold and silver targets accordingly.
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