What possible consequence and impact on gold can be seen due to printing more money? This is just the question which you might have after having a look at the heading.
Well, the year 2020 was astonishing, making humanity come face to face with difficulties never imagined before. There were several aspects that suffered and the economy is definitely one of those aspects. World economy suffered greatly, we have seen it all regularly in the news and have come to accept the fact that the fiat currency may finally be getting redundant soon if the situation does not improve.
However, what mainstream media did not tell you about 2020 is that it was the best year for gold since 2010. 2020 was a great year for precious metals like gold and silver. The doubt regarding 2020 had put a restrain on the mining stocks. However, there are many ways in which we can compare the relative performance of mining stocks and that of gold or silver.
Has 2020 put a restrain on the mining stock?
Though the lack of mining should mean 2021 to be a bad year for these precious metals, however, there is an alternative theory. The analysis states that it is the metals that lead the mining stocks, and in an instance of a bullish move in the sector, the whole sector is expected to go up in 2021. The mining stock may end up outshining the metals after all.
History and bullish trend
Also, the precious metals have been in the bullish spectrum for some time now since 2015 to be exact. The last cycle lasted for more than 10 years between 2000 and 2011. This was possible because it included an increased money supply. It was facilitated by spending deficits and rising debt outstanding in treasury by the government.
The same thing which happened a decade ago is now happening now, helping with the bullish movement in the precious metals market. In 2019, in an attempt to improve the economy, attempts were made to print more money that lead to hyperinflation, rendering the fiat currency redundant. The pandemic-Covid has only worsened the situation.
Printing more money and its impact on gold and silver
Because the economy was suffering more and more, the feds tried printing more money in an attempt to stimulate the economy. However, the effectiveness of such measures is doubtful, at best. With concepts like hyperinflation existing in our minds, we are well aware of the implication that can arise from the extra printed currency. A lot of things can go wrong here and we all are well aware of the fact that if it can go wrong, it definitely will go wrong, especially in the tumultuous times of today.
The loss of job and the subsequent lockdown have further contributed to wreaking havoc. Though now many jobs are recovered, the situation of the economy is certainly not the best, far from it, if we are to be brutally truthful. With business shutting down, the government had the choice to print or let the economy collapse, as well know government chose the former to keep the economy going and stable.
However, all this explanation of the situation does not give you any direction about what to do next. As investors, it is important to understand what is happening in the economy but it is also important to know your alternatives. Increasing the money supply is equivalent to the death of currency through gradual depreciation. The collapse seemed quite inevitable; we have various instances in history right now on our side as case studies. But without going further into that, let us get back to the alternative.
We talked about gold and silver in the initial part of this article and now we are coming back to it. The dollar has lost its value and will continue to do so, however, gold in comparison is steadier with more or less a fixed value with not many fluctuations. So, the investment in gold is the best you can do for yourself and your investments.
The physical gold and silver mining stocks are suddenly the future and it is right now within your grasp, so, take full advantage.
