The US dollar has been weakening significantly due to fears of war and inflation.
When rich people are buying physical gold, it is usually a sign of a crisis ahead.
While gold is strengthening, the dollar is falling
Many people at this time are asking for gold in physical form. They want to reduce their investment in the US dollar and reduce possible impacts. It is also one of the reasons why the price of gold is on historically highest levels. For many people, investing in intangible assets is currently dangerous.
It may also happen that we will see a worldwide “hunt for gold”. This will happen if many people want physical gold and a certificate of investment won’t be enough for them. Finding out that their gold does not have the appropriate backup fund (even if only temporarily) could cause global panic.
Concerns about war, coronavirus and inflation
Concerns are growing in the US. The basic interest rate is negative. One of the reasons why the rich ask for gold is that no interest is always better than negative one. People are also afraid of a possible confrontation between the United States and China. This would mean an additional burden on the state coffers.
US investors are looking for gold due to a possible second wave of coronavirus. Some people speculate that the government’s failure in the first wave and protests in the streets are driving President Donald Trump to sharpen the conflict with China.
Cryptocurrencies as an alternative
During the coronavirus crisis and in connection with the falling dollar, more and more American investors are reaching for cryptocurrencies.
Cryptocurrencies during this period have shown that the centralized financial system is obsolete and needs to be changed and updated. Many banks have begun more intensive research of CBDC.
Cryptocurrencies have a long way to go. However, they have shown that in times of crisis they are a reliable tool and a certainty. Although many investors are asking for physical gold to “touch” it, they also trust cryptocurrencies which do not fall under a centralized financial system.