The COVID-19 pandemic has resulted in a lot of volatility in the stock market, so it comes as no surprise that investors have been looking for ways to safeguard their assets and invest in something a bit more reliable. Of course, there’s only so much predictability you can find in the midst of a global pandemic, but there are many people who have turned to gold investing during this time, believing it to be a potential safe haven during crisis situations.
Here’s an overview of what you should know about the price of gold and how understanding it can be beneficial during a pandemic or other market crises in Olathe, KS and beyond.
About gold investing
Investors are understandably panicked and afraid at the moment, given the massive dips and surges we’ve seen throughout the last several months caused by the ongoing pandemic. The global health crisis quickly also became and economic crisis, and the United States officially dipped into a recession in late February. It’s uncertain how long the recovery will take, as the nature of the pandemic and the resulting economic crisis is much different than the last recession this country faced.
Gold has always been looked to as a shelter from otherwise volatile investments like stocks. It is a combination of being common enough to trade but also rare enough to have a finite supply, which makes it valuable. Its durability thanks to its lack of corrosiveness makes its value quite stable.
Usually the price of gold moves in the opposite direction of the dollar, because if the American dollar gains in value, then it takes fewer dollars to purchase gold. This is why gold price fell in value earlier this year—as the pandemic worsened, investors at first put their money in cash, inflating cash values and thus decreasing the value of gold. However, after the Federal Reserve slashed interest rates, there was less incentive for investors to hold onto cash, and more incentive to put money into gold.
Another benefit of gold is that it serves as a strong hedge against inflation. As the costs of goods and services rises, the value of the dollar decreases. Central banks may begin to print more money to try to stimulate their economies, which will lower the value of currency, thus increasing the value of gold and making it even more beneficial for investors to focus on.
In general, the value of gold tends to hold steady and increase over longer periods of time, compared to the up-and-down nature of stock investments. This is why, even during times of economic strife, it remains a reliable focal point for investors who don’t want to miss out on growth opportunities.
For more information about the various benefits associated with gold pawning in Olathe, KS and the stock of gold items we have at our pawn shop, we encourage you to contact Harrison Street Pawn with any questions you have and we’ll be happy to be of assistance. We look forward to working with you soon.