Gold Prices Hit Record Highs

A Surge for “Safe Haven” Assets

Gold prices have surged nearly 9% this month and 27% this year. Futures contracts for gold deliveries in August hit $1,937.60 per troy ounce, beating a record of $1,923.70 set in September 2011. Silver prices are also surging. Like gold, the metal is seen as a way to store value. Futures for September silver delivery rose by 7.2% to hit $24.49—the highest price seen in about seven years.

During times of economic uncertainty, investors tend to view gold and other precious metals as “safe haven” assets. As the economy continues its volatile stretch, tensions between the US and China rise, the dollar’s value falls, and interest rates decline, many investors are turning their attention to gold.

Bullish for Bullion

When the pandemic first hit the US in March, many traders rushed to sell gold to free up cash. This led gold prices to drop. Since then, investors are piling back into the asset. Physical gold exchange-traded funds (ETFs) have seen an influx of close to $12 billion this year.

Analysts have noted that this bull run for gold is unlike any other due to a number of factors. One interesting reason is that the retail jewelry market is so unusual at the moment. Demand for gold jewelry has plummeted because of store closures, wedding cancelations, and economic uncertainty. Usually if financial demand for gold goes down, demand for retail gold acts as a buffer. That may not be the case this time if the price of gold falls from its record high.

Getting Exposure to the Asset

For people looking to invest in gold, there are a few ways to start. Buying physical gold from a bank or elsewhere is one way to invest, but investors should note that buying physical gold involves other costs like insurance and storage.

Buying exchange-traded funds is another option. These funds give people the opportunity to track the underlying price of gold without needing to worry about holding physical gold. Gold-backed cryptocurrencies or foreign exchange trades are other options for investing in gold.

Lastly, investors can also put money into gold-related stocks like gold miners and producers because these stocks tend to follow gold’s ups and downs. For example, the current rise in gold prices is lifting shares of precious-metal mining companies like Barrick Gold Corp. (GOLD) and Newmont Corp. (NEM).

Gold is an ancient form of currency and is still an important part of investment portfolios. Wall Street will be watching its price to see if the historic bull run continues.

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