What happened
Gold prices rose above $4,000 per troy ounce for the first time Tuesday, as investors rush to invest in safe assets amid financial and geopolitical tumult.
Interest in gold and other precious metals “typically spikes when investors become anxious,” The Associated Press said, and gold has jumped more than 50% this year while silver futures are “up nearly 60%.”
Who said what
Gold’s sharp rise echoes a similar surge that occurred in 1979 amid a period of “high inflation, a depreciating dollar and a geopolitical crisis in the Middle East,” said The New York Times. “This time around,” The Wall Street Journal said, investors are worried that President Donald Trump’s trade war and other policies will “upend the postwar economic order underpinned by the U.S. dollar.”
This “modern-day gold rush has driven many Americans to sell off old jewelry to be melted down” for cash, and others to Costco to buy gold bars, the Journal said, and the “higher prices have been a boon to gold-mining companies.” That mining “frenzy” has also “resulted in health and environmental consequences,” the AP said, as “illegal gold mining” uses a lot of mercury.
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What next?
Some analysts caution that “gold’s multiyear-runs higher have consistently been followed by dramatic busts,” while others predict this rally will be “long lasting,” the Journal said. “Gold will fall at some point,” precious metal dealer Gregor Gregersen told the BBC, “but I believe given the economic environment, it’s on an upward trend for at least five years.”
