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While gold has rallied 16% so far in 2019, there is still a chance for a bigger break in 2020. Bitcoin, on the other hand, is expected to dwarf gold’s prospects considering the upcoming halving.
Gold bugs certainly have had quite the field year in 2019. The price of gold, even though it’s had ups and downs like pretty much every other asset, has still brought in significant year-to-date (YTD) returns so far. The price behavior might be seen by gold bugs, especially those who are anti-Bitcoin, has a feather in the yellow metal’s hat, against Bitcoin, especially recently.
2019 was an interesting year because of quite a few factors. These factors including trade problems, cross-border financial transaction stress, geopolitics, and quite a few others most likely made things difficult for many. However, these same factors are very likely the ingredients that made 2019 a good enough year for gold.
September, specifically, was a great month. Gold reached the highest dollar point seen in seven years and the highest yen point in 40 years. It also hit new euro-records and even in sterling as well. So far, gold has been somewhat impervious to inflation and many of the other problems that plague other assets, in some cases using these negative factors to rise.
From about a year before September, the 10-year Treasury yield lost about 1.76%, plunging to 1.44%. In the same period, spot gold jumped by about 33% from $1,175 per ounce to $1,572. The yellow metal then peaked with 22.6% returns but eventually went through a correction period. Regardless, gold still boasts of a 16% YTD increase.
2020: What Will It Bring for Gold?
Some of the aforementioned factors among the ingredients for a gold rally still persist today. Economists have already forecasted that the global economy seems to be receding and might continue to do so if care is not taken. Negative bond yields should also be considered along with the trade tensions between the U.S. and China. Recent news on that front has it that the two countries are looking to find solutions and have already reached a phase one for the deal. However, there still is a lot of uncertainty. All of these factors, as negative as they might sound to the average ear, are just the right catalysts for gold. This is because, for hundreds of years, investors have generally turned to gold as the perfect hedge against economic uncertainty.
TheGoldForecast.com editor Gary Wagner is a lot more bullish. According to him, gold could very easily shoot up by another 15%:
“This is an extremely, extremely good year for the price of gold. That being said, I believe right now we have been forming a base, roughly around $1450…I’m looking for $1,650 to about $1,700 or $1,690 as the next conclusion of a rally that has really begun over the last couple of weeks.”
Bitcoin, so far, has not exactly been as resilient as it should or is hoped to be. The last week has been particularly disappointing as it dropped to levels around $6,900 a few days ago. Even though it’s back above $7,000, it hasn’t gone in the direction investors have been hoping.
However, there’s something to be said for the halving expected next year. In May, block rewards will be cut down by exactly 50%, driving supply down and pushing prices up. In an interview with BlockTV, popular entrepreneur and Venture capitalist Tim Draper has said that Bitcoin will cross $250,000 months after May’s halving.
Even if for some odd reason Bitcoin doesn’t rally post-halving, its returns are still in no way comparable to gold as Bitcoin has pulled in more than 100% this year alone. Regardless, 2020 is definitely a year to watch out for.