Harald Seiz is right: Gold tops USD 1,800
Harald Seiz, head of the international Karatbars Group, will mark July 7, 2020 in red on the calendar. For the first time since September 2011, the price of the metal is above $1,800 an ounce. This is exactly what Seiz had predicted early on.
The Karatbars Group is one of the world's leading gold traders. More than one million partners and affiliates in over 140 countries distribute the Karatbars gold products in small denominations. The company's motto: gold is the future. And this is exactly what many small investors use for their very private gold reserves.
These are strange times on New York's Wall Street: optimism about a possible economic upswing after a disastrous half-year is causing stocks to rise further. Nevertheless, more than two thirds of all investors are nervous about the growing threat of a second wave of COVID-19 cases, especially since nobody really knows whether the first wave is even over.
Gold's rally does not really fit in with rising equity prices: the price of the precious metal is now at its highest level in nine years. The upward trend remains unbroken.
In the words of Harald Seiz: "We will very quickly reach 1,900 US dollars per ounce. In 2020 alone, the price has risen by almost 19% so far."
Given the comeback of equities in the broader market, the continued rise of gold is remarkable.
Seiz added: "The jump in the price of gold at the beginning of the year made sense, as gold always performs very well in times of financial tension and fear. The current development has many deep reasons, which I have also described in my books."
Seiz is the author of the successful reference books The Future of Money and Think Big. In them, he had already written extensively about the consequences of current economic developments.
Incidentally, the price of gold reached its all-time high in 2011 after Standard & Poor's downgraded the credit rating of the United States, amid the nervousness and crisis in the market over European sovereign debt.
And now, growing concern on Wall Street about the coronavirus is also currently helping to explain the rise in the price of gold. The trend: it continues to rise.
CNN Business’s Fear & Greed Index, which measures seven indicators of investor sentiment, is currently moving back in the direction of "fear" after reaching the level of "greed" only a month ago.
Fear means that investors are rushing for gold in droves. As Seiz knows, "this is also a sign of stress".
At the same time, the bulls are in charge of the stock markets. They drive large technology stocks and thus the broad market, which is actually a sign of confidence. So, it's surprising that gold is still soaring to new heights.
Seiz explains: "At the moment, we have an enormous amount of speculation. In the market, the desire for a secure future is driving prices. But this also increases the danger that everything could collapse again within a few days, if the gloomy forecasts are indeed confirmed and there are new nationwide lockdowns. There is still a lot of skepticism. The recovery is fragile."
Consequently, buying gold is a good hedge for every private household and investor, cushioning the risk of a possible retreat in the stock markets.
After all, there is also this bitter reality: the recovery of profits and a possible restructuring of the economy will hardly occur in 2021, as expected.
Investors could also bet on a possible rise in inflation. The price of gold tends to skyrocket when central banks keep interest rates extremely low.
In the US, the Fed (like the European Central Bank, by the way) is trying to boost the economy with a variety of credit programs. More and more money is being pumped into the system.
All of these "incentives" could ultimately further weaken the value of the dollar and the euro and generate higher inflationary pressure, "and that would be very good for gold," says Seiz.
He has already sharpened the pencil for the new highs.