23.10.202013:42 Forex Analysis & Reviews: Gold may have unlimited growth potential

Long-term review

Exchange Rates 23.10.2020 analysis

Each new crisis leads to an increase in the already gigantic debt. The current coronavirus crisis has proven this again. To support the economy and the lives of citizens, printed money comes to help. This has already become the rule. Governments cannot imagine life without printing money. How long will it last? And to what level will the price of gold rise?

At present, welfare in society is no longer created through pure economic activity. The world seems to have reached its limit of growth.

It all began in 1971 when the US abolished the Gold Standard. Since then, money supply and economic growth have been independent from each other. World debt is only expanding every year.

And the value of gold is growing by about 7% every year due to the depreciation of paper currencies. They are losing their purchasing power due to the unprecedented printing of new bills. The global debt has reached gigantic proportions, which it seems impossible to repay. There is an urgent need to change the monetary system, but who cares if it is much easier to start printing?

On the other hand, if politicians come to their senses and try to smooth out the negative aspects of the financial and economic structure, other problems may occur. Economic interests will be more important than civil rights and freedom. This may lead to an imbalance, division of society and, sooner or later, chaos.

Gold has always been in high demand. It is the most reliable asset today. Gold is hard to manipulate, unlike statistics of unemployment and interest rates. In nearly every country in the world, central banks hold large reserves of gold. When the world drowns in debt, gold will be the only means of survival. Therefore, there is no doubt that gold will continue to rise. The price of gold has a negative correlation to paper money. When the value of paper currencies plunges to zero, the precious metal can become increasingly valuable.

Meanwhile, gold futures for December delivery rose by 0.14% to trade at $1,907.35 per troy ounce. Silver lost 0.07% to settle at $24.727 per troy ounce, while copper price decreased by 0.60% to hit $3.1458 per pound as well.

The US Dollar Index Futures, which measures the US dollar against a basket of six major currencies, grew by 0.10% to trade at $93.055.

Kate Smirnova,
Analytical expert of InstaForex
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