2020 has been a crazy year not only for life in general but also numerous parts of the stock market has been utterly crazy.
Why I think that gold will be a good investment for the end of 2020 and the beginning of 2021.
I believe that there are 2 main reasons for this, firstly the devaluation of the dollar in 2020 and secondly the US election in November.
Throughout 2020 we have seen the US federal reserve use and abuse QE to the point that the balance sheet increased to $6 trillion. This has dramatically increased the money supply within the economy which leads to inflation. Although this increase in market liquidity has lead to a recovery in the stock market and presents a lot of opportunities within equities. However, most asset classes, e.g. Equities, Real Estate and Commodities have all increased in price (not necessarily value) which could confirm the inflation we are experiencing. Based off of this I think that gold could be quite a good investment not only for wealth preservation but also for wealth accumulation. Precious metals are always a good hedge against inflation as they store value. I think investing in gold would be good for storing your wealth and investing in silver would be good for growing your wealth.
The second reason I think gold a good investment in the late 2020 2021 is that in mid November that will be the US elections and the current favourite to win that is Joe Biden. One of his policies is to increase capital gains tax to raise tax revenue to $3T over the next few years this may lead to investors selling stocks to avoid the capital gains tax hike therefore leading to an increase selling volume. This is important because I believe that the US markets especially as still overvalued as they’ve recovered to precoded levels despite covert still running riot in the US. Therefore I believe this could be the catalyst to trigger a massive market sell-off in which an investment in gold and silver would be useful for the same reasons as hedging against inflation. Gold will keep its value and appreciate slightly an investment in silver especially in stocks will help accumulate your wealth.
These are prediction so I can never be 100% certain but I feel that the US dollar has been devalued significantly and that the market is still overvalued and as many value investors will tell you the market is always right and I believe that it’s just waiting to correct itself.
Leave a Reply