Gold is trading at a record and investors scramble to get their hands on a piece of the precious metal. A private bank meanwhile sold half of its stock – why now?
The reasons for the surge of the price of gold are well established – with the uncertainty prompted by the pandemic, an ever sharper exchange of words between the U.S. and China, high stock market prices and low-interest rates.
The price of an ounce of the precious metal is approaching the magic threshold of $2,000 (today Wednesday it traded at around $1,958).
A Different Scenario Altogether
Analysts concur that the boom may last for a while to come and some have named potential new records of $2,200 or even a staggering $3,500 per ounce. Samy Chaar, chief economist at Lombard Odier in Geneva, begs to differ.
He believes in an entirely different scenario and together with his team of experts, he proposed the private bank to sell half of its gold stock, as he mentioned in an interview with U.S. TV-channel «CNBC». He did not specify the exact amount that was sold.
The U.S. Recovery Will Come
Chaar is a respected economist. He doesn’t dispute the facts that speak in favor of gold. But he argues that the U.S. interest rates don’t reflect the economic realities. The biggest economy is currently in a difficult situation, struggling to contain the spread of the virus and faced by manifold problems.
One day though, the U.S. will rebound and rates then will rise, said Chaar. When rates are up, gold inevitably will lose some of its allure and therefore value. On this background, the sale of gold by Lombard Odier turns into an early measure of profit-taking.
