Post COVID-19: Is Gold and Silver Investment a Wise One?

The earth’s crust is filled and rich with minerals that have become an essential factor in the growth of the world’s economy. These ores are transformed into metal tools, machines, equipment, motor vehicles, solar cells, and as in the case of valuable metals, like gold and silver, they are used for exchange and monetary transactions.

All of these minerals are products of mining, and society has become heavily dependent on these products. It is from these raw materials that many countries and nations manufacture and produce value-added products. This makes raw materials the foundation for all modern industrial economies.

The coronavirus has severely affected the economy of many countries and the stock market. The COVID-19 pandemic severely affected every link in the supply chain of precious metals, in this case, gold, and silver. The fact that investors are demanding more gold, leading to a strained supply that often results in high prices and a bullish market.

The disruption to the supply chain of these metals have rippled from the mines to the investor;

  • Production: many mines stopped the production of these metals because of the risk of exposure to the coronavirus pandemic. In some countries, it ended because of COVID-19 based legal restrictions.
  • Delivery: the strict regulations on travel restricted the shipments of these metals and increased the costs of the distribution as fewer air routes were available.
  • Refinery: they depend on the production of metals for input. A reduction in the amount of gold produced and the suspension of labor decreased the supply of refined gold.
  • Traders: considering the constrained supply and increased cost of delivery, it is no surprise that the traders, check about Silver Gold Bull, increase the price of these metals translating the burden to the end-users
  • The end-users: for the buyers, all of these factors caused a sporadic increase in the price of the metals.

Despite the severe fall of these precious metals during the most critical period of the pandemic, they have increased in value as the effects of the virus reduce. Gold and silver have shown a remarkable recovery rate, and there is some hope that more gains are still to come due to momentum buying. Both metals are finding strong support from falling yields, and there are expectations that central banks will keep their respective monetary policy stances loose for some time to try to combat the economic effects of the virus.

The negative interest rates that are the norm in situations such as the pandemic has caused investors to try other ways to store gold and silver, that is, alternative investments since the benchmark bonds yields are on a low. The ease of restrictions adopted by countries around the world and the global economy coming out of the lockdown situation, there is going to be a likely increase in the demand for these precious metals, which would make investments in them yield a substantial gain. That is unless there is a re-introduction of the lockdown restrictions due to a second wave of the pandemic.