Gold price has lately lost its momentum
However, there is hope for the gold bugs.
Last year turned out to be a dream for gold speculators and investors after the gold price rose sharply and hit historic highs thanks to a perfect storm out of a global pandemic, massive government stimulus packages, a weakening dollar and a finally run out of fuel bull market . The meteoric rally marked the metal's sharpest rise in more than a decade, with the price of gold nearly doubling between August 2018 and August 2020. Unfortunately, the rally has run out of steam recently, and gold has fallen 15% from its all-time high of $ 2,066 an ounce about eight months ago. This is a huge disappointment for the gold bulls as some Wall Street hedge funds have been extremely bullish on gold, with some targeting prices as high as $ 3,000 and even $ 5,000 an ounce. The downtrend in gold begs the question: Why did gold suddenly fall out of favor after such a spectacular run? And, more importantly, is there a way back for the yellow metal? A big reason the gold bears have gained the upper hand is growing optimism that the global rollout of the Covid-19 vaccine will help many economies return to a semblance of normalcy faster than expected. In its April update of the world economic outlook, for example, the IMF raised its forecast for global GDP growth for 2021 and 2022 to + 6% and + 4.4%, respectively, mainly thanks to the rapid introduction of the vaccine and extensive economic stimulus programs is. That's a big reversal from a 3.3% decline in 2020 when the world was hit by a pandemic. The United States has so far unveiled the world's fastest vaccine launch, according to Bloomberg, placing itself in a good position to fully re-open the economy. The latest vaccination rate is 3,053,566 doses per day, which means that 75% of the population could be covered in just three months, the so-called herd immunity. In general, the global introduction is proceeding at an admirable pace, despite numerous hiccups. By April 14, 2021, 841 million Covid-19 doses had been administered worldwide. That equates to 11 doses per 100 people. However, there are still big differences between vaccination programs in different countries, many of which have not yet reported a single dose. Seychelles tops all countries, with 68% of the population vaccinated compared to just 37% in the United States. A vaccinated person refers to someone who has received at least a single dose of a vaccine. As the risk of a pandemic becomes increasingly subdued, safe haven investors could lose interest in gold. But even more devastating for the cops is that investors are apparently turning to Bitcoin as a new safe haven. As early as September, the alternative investment firm iTrustCapital announced that it was doing brisk business at a time when the stock markets were tumbling. iTrustCapital, the leading investment platform for alternative investments, including cryptocurrencies and gold, said it had completed more than 10,000 transactions so far this year, with the majority coming from investors who bought their 401 (k) and IRA retirement accounts from traditional securities how stocks and bonds switched to alternative investments like Bitcoin. In recent years, the digital currency has become a hot favorite for a diverse bunch of exotic quants, speculative professionals, and retail investors, while traditional investors have tended to stay on the sidelines. But that seems to be changing as institutional investors like Guggenheim Partners LLC, Paul Tudor Jones, and Stan Druckermiller have jumped on the Bitcoin bandwagon lately. In fact, JPMorgan Chase & Co has reported that smaller funds have been steadily selling their gold ETFs and buying bitcoin. Funds have sold nearly 100 tons of gold worth approximately $ 5 billion since early November, at a time when Grayscale Bitcoin Trust, the vehicle of choice for institutional investors, doubled its value in dollars.