People Could Buy Gold Bullion as the Market Heads Into a Recession
The stock market has become extremely vulnerable due to the COVID-19 pandemic. The Dow Jones Industrial Average is looking at its worst quarter since 1987, as it dropped by 21.8 percent. The S&P 500 also dropped by 18.7 percent in the first quarter. There is a concern that the market could head into a recession, especially as it is unclear what will happen in the coronavirus situation.
Meanwhile, the price of gold has gone up by 6 percent. Kitco reports that June futures for gold are up by more than 5 percent.
There is a potential for people to buy silver bullion Brisbane as a safe-haven investment during this ongoing concern. There is a great deal of uncertainty surrounding the coronavirus pandemic, thus making the stock market fragile.
More importantly, it may be wise for people to buy silver bullion when its historical performance is considered. Gold and silver managed to experience a long-term rise in value during the 2008 recession. Prior performance and the potential for people to invest their stimulus checks as they buy gold and silver bullion are points to note.
Looking Back At 2008
Gold Republic writes that in 2008, the price of gold dropped after the bailout of Bear Stearns and the bankruptcy of Lehman Brothers. Many banks that were failing had to borrow gold and sell it on the market to acquire the dollar liquidity they needed. The gold support on the market grew, thus prompting a drop in its value.
It would not be long before the value of gold and silver came back once again. Macrotrends shows that the total went from about $1,200 per ounce in March 2008 to $870 per ounce in October of that year. As the recession ended, the price of gold started to rise back to the four-digit mark. The total has stayed over $1,200 per ounce since, and it even flirted with the $2,000 mark at one point in 2011.
Is This Better Than Stocks?
The price of gold and silver rose unlike other investments due to the COVID-19 pandemic. While gold saw a rise of 1.87 percent in value in March, the total did experience a dramatic dip as the reality of the coronavirus situation started to appear. The total dropped below $1,500 per ounce but has climbed up to nearly $1,600 once again.
But any drops in the value of gold silver may come from investors to need to sell their gold deposits to produce liquidity in their assets during market panic. There is a potential that the price of gold will rise further and become more profitable than stocks. The upcoming reduced interest rates and added liquidity injections may help add capital into gold once again.
Americans who qualify for the stimulus bill may also invest their new funds in gold. By choosing to buy gold bullion, these people may end up causing the value of the precious metal to rise once again.
The desire to buy silver bullion Brisbane from a dealer may become viable in the future, especially as stocks start to drop. The past performance of gold in the last recession suggests that this may prove to be an investment people can trust.