‘There’s only so much gold out there’: Why gold prices are soaring during the coronavirus

By Sam Becker

Investors with precious metals in their portfolios may well feel like they have the golden touch right now. That’s because gold has come close to all-time high prices since the crisis began, and while stocks are still down from earlier this year, gold is earning investors rich returns.

Gold prices reached an all-time high of $1,773 per ounce in July of 2012. But this year, they’ve almost breached that ceiling. As of the beginning of June, gold is selling for around $1,750 per ounce — an increase of more than 15% since the middle of March. It’s also up 45% over the past five years. Two decades ago, at the beginning of June in 2000, gold was selling for only around $256 per ounce, and current prices reflect an increase of 535% since then.

Experts say there are two main reasons why gold has become the year’s hottest investment.

Why gold is increasing in value

It’s the “store of wealth” aspect of gold that attracts many investors, who are concerned that inflation will eat up the value of cash over time. And with interest rates currently at 0%, even stashing money in a savings account is likely to lose you money over time.

“Gold is seen as a store of value and an alternative to government-issued currencies,” says David M. McInnis, principal and co-founder of investment advisory firm East Paces Group in Atlanta. “The gold supply isn’t as easily manipulated — you don’t need to worry about the government printing up a bunch of gold.”

Should you have gold in your portfolio?

Given that gold prices are currently at all-time highs, it may seem counterintuitive to add it to your portfolio. Some analysts are bullish that gold could continue to increase in value throughout 2020, though, perhaps even breaking through the $1,800-per-ounce mark.

A decision to invest in gold or other precious metals should preferably come after a discussion with a financial professional. Because gold can be a very volatile investment, it’s not for everybody.

McInnis says that he would recommend against investors dedicating a significant portion of their portfolio to precious metals, though he understands the appeal. “Gold is not something we typically recommend, but it has a long history of being a hedge,” he says.

Still, McInnis and others say investors shouldn’t look to invest in gold until they have covered all of their other financial bases…

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