Strategist Expects Gold, Silver To Gain As Pandemic Panic Subsides

Gold and silver prices rallied Monday amid market strength as news from a Moderna Inc MRNA trial stoked optimism about a potential coronavirus vaccine. 

On Monday, June gold futures were trading at $1,733 and July Comex silver prices were at $17.39 per ounce.

“Gold and gold stocks had a strong month, recovering all of their March losses and moving to long-term highs,” Joe Foster, portfolio manager and strategist at VanEck, said in a note.

Hedging With Gold 

As the pandemic market panic subsides, investors are trying to gauge the risks and opportunities in a world that carries a level of uncertainty that only those with memories of the Great Depression and World War II have experienced, the VanEck strategist said. 

“Continued strong inflows to bullion exchange traded products along with strong demand for retail coins indicates both institutions and individuals are turning to gold as a store of value and hedge against uncertainty,” Foster said. 

On April 9, gold jumped $40 per ounce when the U.S. Federal Reserve unveiled its $2.3-trillion program to aid local governments and small- and mid-sized businesses.

“It [gold] went on to a new seven-year high of $1,747 per ounce on 14 April, then consolidated its gains around the $1,700 level. Gold ended the month at $1,686 per ounce for a $109 (6.9%) gain,” he said. 

Banks 'Can't Arbitrarily Print' Gold 

The trillions being injected into the economy via quantitative easing alongside monetary and fiscal stimuli devalues and debases paper currency, said Bryan Slusarchuk, CEO of Fosterville South Exploration. 

“Gold is the only currency that central banks can't arbitrarily print more of, and as such it is the only currency that acts with stability during a time of crisis,” he said. 

With more and more paper currency in circulation, the currencies become inherently worth less and less, the CEO said. 

Price Action

The SPDR Gold Trust GLD was down 0.57% at $163 at the time of publication Monday, while the VanEck Vectors Gold Miners ETF GDX was down 1.56% at $36.

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