At the beginning of the crisis of the Covid-19, gold had adversely surprised, losing more than 20 % of its value. A decline yet classic ! “Whenever there is a crisis (1998, 2000, 2007), it is the same scenario,” says John Plassard, investment specialist at Mirabaud. The courses of the yellow metal begin to fall, investors are selling their positions for liquidity and to face the stalls of their customers. And then the gold goes back up, regaining its safe haven role. From there to achieve so quickly the 2,000 dollars the ounce, and exceed his record-breaking September 2011 (1 921 dollars), and only the most daring, as John Plassard, or Benjamin Louvet at Ofi Asset Management, were risky, concerned about the persistence of the health crisis and the depth of the economic recession.
So strong is it (+ 33 % since the march lows), the up does not seem complete. For at least six reasons :
1) The persistence in the coming months of the accommodative monetary policy of central banks. In support of economic activity affected by the Covid and containment, central banks have injected nearly € 2,000 billion in liquidity and maintained as a corollary of the low interest rate, or even negative. The yield on u.s. treasury ten-year is down to 1 %.
2) The implementation of expansionary fiscal policies to support the economy all the more strong that the epidemic is not contained, and that the rebound will require accompanying measures in the financial and social order to ensure the construction of the world-after (digitalisation…). In both Europe and the United States, the return to a balanced budget is no longer the order of the day. For proof, Angela Merkel has, for the first time in the economic history of the German renounced the dogma of orthodoxy.
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3) An increasing demand from traditional players (central banks), but also of actors who intervened little so far on the gold (money managers of ETFS, investment funds, pension funds…). With as only downside, the decrease of 40 % of the purchases of jewelry, which represented, until then, one-third of the demand.
4) The political uncertainty marked by the u.s. presidential election, the conflict in sino-american, the Brexit…
5) The disappearance of its principal handicap : that of not to issue a return (no interest, no dividend). With the low rates, its competitor – the bonds no longer yield little or nothing. Individuals were not deceived and have increased in recent weeks as their purchases of physical gold by more than 15 %, according to figures from the network however, in cash but also via index products (ETF).
6) Its role as a safe haven in the face of volatile financial markets which could suffer from the fall in the results of companies.
For all these reasons, the experts of the private bank Union are not exclusive of one ounce of gold between 2 100 and 2 300 dollars, those of Goldman Sachs, an ounce to more than $ 2,300 within a year, while those of Bank of America expect $ 3,000 at the horizon of eighteen months. Gold has not finished surprising us !
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