Editorial | Fear has its price as gold nears US$2,000 in uncertain world
- Whether you are a pessimist, optimist or realist, there is no doubting that the yellow metal looks set to breach its psychological level amid a flight to safety
Gold is king. Since the first outbreak of Covid-19 at the end of last year, the precious metal has been on a tear. Now, it is set to breach the psychological level of US$2,000 per ounce, making it one of the best asset classes during the global pandemic. It has matched its reputation as a safe haven, and then some.
But how safe is it, really? If it continues its ascent, it will probably mean the world is going to pieces. This is because gold has always been viewed as a safety blanket against disaster, whether natural, economic, political, or all of the above. Fear has always been associated with the hoarding of gold, including jewellery.
Certainly, the world today doesn’t look safe any more. We in Hong Kong have long considered our land the place of safety and fortune, in a world full of deadly conflicts and uncertainties. Well, look what has happened to us!
In the worst-case scenario, your gold may not be enough to save you from Armageddon. But it probably will not come to that, fingers crossed. Gold prices will fall back, just like they did after the worst phase of the global financial crisis more than a decade ago. The world will recover from the brink.
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Indian man wears US$4,000 gold face mask to protect from coronavirus
First, an obvious reason for the rise of gold: it’s priced in US dollars, and the greenback has hit a two-year low. There is a view, now increasingly common, that the US dollar is starting a long-term decline against global currencies. And that scenario encourages people to find safe havens, including gold.
