Gold has done well in the last couple of months. The price has soared to unprecedented heights in a very short space of time mainly because of the Corona Virus and the events that precipitated the pandemic. It became ear in the first quarter of 2020 that it was going to be a bumper year for precious metals, especially safe-haven assets like gold as people scrambled to keep their money safe. In March, dealers and mints across the globe were in a panic because they were running out of stock and feared they could not fulfill orders especially when lockdown regulations were put in place. Gold dealers and gold producers like Australia’s Perth Mint not only had to either shutdown production or use skeleton, they also had to deal with shortages of raw materials. Several mines had to temporarily shutdown, used gold buyers who provide scrap gold also could not supply refineries and mints. Still, it was a good year for Perth Mint as it sold more of its product than it did. Shipments of gold products doubled compared to the previous years.
However the sale of gold bullion coins and bars dropped by 8.7% to over 76,800 ounces. The sale of silver also dropped by 5.8% in December, this was the lowest it has dropped to since May 2020.
Already, this year the gold price rose by 25% which is the best result in over a decade and the price is still on the rise because of the high interest rates and inflation figures. Gold price direction will likely be determined by the economic stimulus packages that governments and central banks are dolling out.
IN 202, the price of gold went up by 25% which was the highest they have climbed in over a decade. The Corona virus might have dealt a serious blow to the global economy but the decision that the government had to make to pump more money to stimulate the economy, did not quell the demand and the rise in prices of precious metals like gold. This is mainly because gold is and has always been regarded as a hedge in economic crises. Gold dealers have been complaining about the supply of bullion being low and mints like the Perth Mint which refines over 90% of Australia’s gold has not been receiving the usual amount to refine and mint into new gold products.
It was not the only refineries and mints that struggled to get its products out. Vaulting service providers also had problems shipping gold to other countries.
We still have a long way to go with COVID. Gold buyers, even the ones dealing with scrap gold could not source material to refine but the easing of lockdown regulations did help. As we get into 2020, we find out that the vaccine we have been promised may not be enough for all. So, we might struggle with this virus for a while longer. This is good news for the gold price and for the mints that produce gold products.