No thanks to the Covid-19 outbreak, 2021 has been an overall bearish year for gold. However, investors and investment banks alike remain optimistic of a strong recovery in the commodity’s prices- for the near and long term.
Investors have always viewed gold as an efficient hedge tool against inflation, considering how the precious metal’s value would always remain unaffected even in the most unfavorable economic conditions. This year however has been different, largely due to the pandemic and its corresponding effects on the global financial markets. Gold has been on a record downtrend, that stretches over 9 months i.e from July 2020 to March 2021.
As of the time of this publication, gold was seen trading at around $1, 686 per ounce, which is 11% down already in 2021 alone. One would assume the case is the same for other metals in the commodities category such as Copper, Iron, or Nickel. On the contrary, it’s been a transformative year for those metals, which makes that of the leading precious metal situation even more complicated.
Despite that, the investment banking firm, Goldman Sach believes a commodity super cycle for gold is near and is already gradually starting. Even JP Morgan, another leading investment banking service provider, shares a similar sentiment. The bank points to how certain big players on Wall Street are beginning to bet heavily on the assets with expectations of making huge gains.
Bitcoin is Outperforming Gold
While the pandemic might have negatively affected gold’s price, it has, however, created the perfect atmosphere for Bitcoin as the attention of a significant number of institutional firms aggravated towards the asset- with some referring to it as the “Digital Gold”. Microstrategy, Tesla and Square are some of the notable institutions on that list. However, even Bitcoin has also found itself on a road to recovery, after a major decline in price on Feb 22. As of the time of this report, Bitcoin was seen trading around $51,100, a big jump from its initial price of about $43,000.
The year to date gain of BTC stands around 72.62% while that of the yellow metal has yielded a negative return of 11%.