Gold, the yellow metal, has long been prized by countless civilizations for its luster, beauty, value, and status as a stable investment. Even in a modern, digital economy, many still dream of owning physical gold coins, bars, and rounds as part of an investment portfolio.
The coronavirus pandemic and ensuing economic fallout left many researching tips for buying gold, as precious metals became a hot commodity for those looking to protect their assets in turbulent markets.
Gold closed out 2020 by enjoying one of its best years in a decade, growing and maintaining value across the year in the face of a U.S. Dollar that ebbed and flowed in value. Overall, gold jumped 6.3% in December 2020, experiencing close to a 25% YTD gain at the time. Last year’s gains were the best returns for the yellow metal since 2010, where the asset’s price rose almost 30%.
While gold enjoyed strong growth in 2020, many speculate the value of the precious metal could continue to rise over the next decade. Bullish holders point towards decreased confidence in traditional fiat currencies, questions about economic recovery in “the new normal,” and a general desire for investors to diversify assets and explore options like physical bullion.
Here’s why the value of gold might continue to grow across the next decade.
Supply & Demand
Information from the World Gold Council reveals gold demand has slowly edged upward from 2016-2020, resting just below 2010 levels regarding demand.
Speculation is worrisome economic times will present a bullish case for gold as more investors will be interested in buying but will be forced to purchase from a supply that has not grown much. This makes gold’s value more alluring as mining companies catch up over the next couple of years to keep pace.
Many dealers and online retailers reported huge runs on gold and limited supply during the first few months of 2020, as panic due to the coronavirus led many to invest.
The case for gold’s growth looks strong in the face of projected economic activity over the next decade. While Millennials are entering their peak earning periods and remain focused on buying stocks and alternative assets like cryptocurrency, general aging demographics mean more investors are searching for ‘safe’ assets like gold bullion.
As nations struggle to manage the healthcare costs for older populations, some analysts believe the 2020s could lead to a period of ‘stagflation’ similar to what was seen in the 1970s. A repeat of these economic conditions would lead to a big boost in the gold price. Gold was $64 per troy ounce in 1973 but jumped to $447 by 1982.
Gold ETFs Remain Popular, Opening Avenues For Buying Bullion
Many imagine large banks and entities buying and selling gold. While this does occur, smaller investors across the world continue to express enthusiasm in gold bullion.
Last summer, Gold-based ETFs as a whole held as many gold bars as what was stored in Fort Knox due to consumer confidence by private individuals and groups. The SPDR Gold Shares ETF purchased 15 tonnes of gold in two days in August 2020. The growth of gold ETFs continues to spur bullion investment, as people who are worried about economic markets have another digital tool to purchase gold in seconds.
Physical Gold Mining Continues To Expand
Gold mining, especially in Africa, has long been dominated by South Africa. However, miners have started to shift and expand in recent memory to nations like Ghana, Mali, and Burkina Faso. Currently, Ghana is home to some of the largest gold mines in the world. All minerals extracted in the nation total 37% of the West African country’s exports.
In Mali, artisanal miners are working alongside large entities to produce dozens of metric tons of gold each year, greatly contributing to the nation’s economy.
The mining sector in Burkina Faso has greatly expanded as companies work to extract gold, copper, zinc, and limestone. Gold mines in the country are privately run, with some entities agreeing to partner with the Government of Burkina Faso to collaborate on mining.
Gold’s Promising Growth Over The Next Decade
Concerns about the global economy and traditional markets’ stability continue to drive investors towards precious metals like gold. Gold only looks set to grow in value over the next ten years due to increased demand, the expansion of gold mining operations in Africa, and sustained investor confidence through products like gold ETFs.
