Central banks around the world are currently printing more money than ever before in connection with the Corona Pandemic to keep the rest of the economy afloat and maintain social peace. The short-time work allowance is equivalent to an unconditional basic income, and given the alternatives, that is a good thing at the moment. The danger, however, is that an addiction to cheap money will arise and the bubble in the shares of Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: APPL), Netflix (NASDAQ: NFLX), Google/Alphabet (NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT) will continue to escalate. The value of these six US companies is now almost equal to the combined market value of the following indices: DAX, France CAC, FTSE 100, Italy MIB, S&P TSX and Spain IBEX. But the winner of this development is also the oldest currency in the world: gold!
Rescue measures with side effects
Diego Parrila manages a USD 450 million investment fund and has indicated that the price of an ounce of gold could rise to USD 5,000.00 in the next three to five years. "What you’re going to see in the next decade is this desperate effort, which is already very obvious, where banks and government just print money and borrow, and bail everyone out, whatever it takes, just to prevent the entire system from collapsing," Parrilla said in an interview with Bloomberg. If you want to escape the bubble of fiat currencies and seek protection from inflation, there is no way around gold.
Experts predict rise
Gold production is running at full speed, as at a price of USD 1,800.00 the profit margins for producers are currently high. If one believes the forecasts of Goldman Sachs (NYSE: GS) and Bank of America (NYSE: BAC), the price will have potential up to USD 2,000.00 or even USD 3,000.00 in the next 12 months. The reality, however, is that no one can say for sure at the moment how long the measures taken by politicians and central banks will be needed and when the day of reckoning will come. Until then, money will be busy printed and distributed.
Exploration in the key position
If you as an investor want to profit from the rise in the price of gold, you should look at the exploration industry, this is where gold is found. Without exploration, global reserves will continue to shrink. In the period from 2012 to 2019 the gold reserves of the largest producers have already decreased by 34%.