Old-fashioned outcome

31 March 2020 By Martin Hutchinson

Worldwide central banks have maxed out monetary stimulus. That makes all safe havens less safe except one. Gold’s growing supply scarcity and rising production costs make it solider than bitcoin, real estate or stocks. The 19th century asset is having a renaissance in the 21st.

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Central banks have launched a range of large stimulus packages and monetary expansion to counter the effects of the coronavirus pandemic.

The U.S. Federal Reserve on March 23 announced a program of unlimited purchase of Treasury and agency securities, together with targeted supports for the corporate bond market and consumer credit.

The European Central Bank on March 18 launched a 750 billion euros bond buying program, including public sector and private bonds and commercial paper. The next day, the Bank of England lowered its benchmark interest rate to 0.1% and increased its bond buying program to 645 billion pounds.

The price of the Comex near-term gold future was $1,622 per ounce at the close of March 30, up nearly 12% from its low in 2020 to date, and roughly one-quarter higher than a year earlier.

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