Gold has been volatile in recent weeks. But, lately, the precious metal has lost some ground from the all-time highs set in August amid roll-outs of COVID-19 vaccines around the world. While speaking in an interview with S&P Global, Ed Moy, the chief investment strategist at Valaurum mentioned:
“Short term, there’s a lot of factors that are causing some push and pull, which has kept gold trading within a very tight range. But from my perspective, I think the fundamentals for rising gold prices are very strong over the next year. I expect gold prices to eventually break out and head to new records sometime in the next year or two.”
When speaking about the reaction to the health crisis, Moy added:
“The same things were happening when COVID-19 first started breaking out. Lockdowns started coming into place, people panicked, they went into gold. Gold actually shot up to a new high, and the government … [is] basically throwing more at it than what happened during the financial crisis. Plus, with the vaccine, people started relaxing.”
Moy is convinced that the markets will surge further as the year progresses. Eventually, gold prices will rise considerably as economies around the world continue to re-open further:
“I think that until it becomes certain how the economy will recover and that the recovery will be slow enough to manage inflation, gold prices are going to go up. Once those two criteria are hit, then gold prices will go down, and I won’t be surprised if we hit new highs.”
The Bitcoin Market
That interview did not stop with just gold. Moy has a majorly pragmatic approach to cryptos too. He stated:
“When you take a look at the overall similarities, both are limited quantities. Bitcoin is limited to 21 million that could possibly be mined. People have tried to recreate gold in a laboratory; they have not been able to. So the amount of gold that’s in the earth is all that will ever be.”
According to him, crypto prices have an inverse correlation to the US dollar’s value. Therefore, when the dollar plunges, gold and bitcoin tend to go up. But some underlying differences exist. These differences are important depending on the portfolios that investors hold.
One major difference is that gold has existed for more than 5,000 years while bitcoin is 11 years old. The longevity of bitcoin is yet to be proven, which makes some investors hesitant whenever they are seeking haven assets.