If you’ve ever wondered about the state of the gold supply shortage, you may be surprised to learn how severe it actually is. In the wake of the recent COVID-19 pandemic that wiped out a large portion of the global supply chain, the world is facing a gold supply shortage that is so bad it could run out of gold in as little as 40 years.
Demand for gold is a good store of value in uncertain times
If you’re looking for the best gold investment companies that offers protection in uncertain times, you have the right mindset. Gold prices are rising, and more investors are adding it to their portfolios. But there are still some things you need to know about investing in gold.
One thing investors should be aware of is that despite the fact that gold is a valuable asset, it doesn’t necessarily offer a high yield. The price is based on scarcity, and the value of the commodity is derived from a long history of it being a stable medium of exchange.
Gold’s value is also influenced by its historical role as a safe haven. When a country is facing a recession or other economic turmoil, investors flock to gold as a way to preserve their wealth.
Central banks are net buyers of gold
Central banks are net buyers of gold. In fact, they have been for a dozen years now. This trend has resulted in a significant amount of gold demand over the past few months.
The demand for gold is driven by flight to safe assets amid soaring inflation. Gold is an effective inflation hedge, and offers diversification benefits to investors. Moreover, it provides stability to the central bank.
Central banks have been accumulating gold reserves at an unprecedented pace since 1967. These reserves are equivalent to roughly one-fifth of all the gold that has been mined. Since then, these reserves have increased by 82 percent.
The reason for this increase in gold demand is mainly driven by the concern over a possible global financial crisis. This concern is driven by investors looking to store value in assets that have a higher margin of safety than equity. Similarly, it is also fueled by fears of a trade war between the United States and China.
A COVID-19 pandemic wreaked havoc on the global supply chain
COVID-19, a virus that originated in China, has spread to Europe, South Korea, and the United States. It has already killed over 700 people worldwide and prompted a global health emergency. As the outbreak continues to spread, it is affecting the world’s economy in unexpected ways.
The global supply chain is a complex system made up of many different elements. These include manufacturing facilities, distribution centers, retailers, and consumers. All of these elements have a direct impact on the performance of the supply chain.
A pandemic can disrupt the supply chain, creating a shortage of raw materials and parts, which affects the production of goods. In the case of the US, these problems have also affected shipping, which is essential to the economy.
Grounded flights disrupt plans to transport gold around the world
A grounding of all domestic flights has a decidedly negative effect on the transport of gold. Almost a thousand of these planes were grounded over the course of a single day and the airline industry is still closed in many parts of the country.
The grounding of the airplanes has also had a knock on effect on other things, like airline ticket prices, which have skyrocketed. On top of that, the aforementioned aforementioned aforementioned incident has had a negative effect on gold’s price per ounce. Several large refiners have shuttered operations in countries ranging from Canada to Argentina to Switzerland.
However, the fact of the matter is that gold miners have had to resort to other means of moving their precious metal. Some of these include private aircraft, which were able to ferry the orbs from one continent to another, while others used armored trucks.