Despite the global uncertainty caused by COVID-19, and heavy hitters such as Ray Dalio, Warren Buffet and Stanley Druckenmiller investing heavily in gold, the yellow metal has not yet made the big moves predicted by many. Below are some reasons why, and how this will likely change in the near future.

Buffet Caused Excitement By Investing In Barrick

Warren Buffet made headlines recently when he took a huge position in the Barrick Gold Company, which amounted to approximately 20 million shares. This is significant given the fact that Buffet, who is widely regarded as the world’s top investor, has historically been quite bearish regarding gold, and never really held it in high regard. His decision to invest in Barrick indicated a change of heart, and led many to conclude that he knew something about gold and mining companies that most investors didn’t.

However, he ultimately sold about 8.9 million shares, almost half of his total position, and this was after only holding the shares for a few months. This is quite unusual as Buffet is famous for buying and holding. But most likely he decided to use some of the capital for other things. Despite this, and the fact that gold fell from its recent high of $2100, experts are still convinced that we are about to head into a major bull run that will also benefit silver and other precious metals.

Central Banks Will Continue To Favor Stimulus

Janet Yellen, the Treasury Secretary, has made it clear that she will most likely continue the strategy of using stimulus to try to boost the economy. In fact, studies show that twenty one percent of the U.S. dollars produced in 2020 were done so digitally. Since Joe Biden agrees with Yellen, and he recently won the presidency, it is very likely that we will see a tremendous amount of dollar printing in the near future.

The manner in which the U.S. government (and governments around the world), responded to the COVID crisis has put them into a corner. On the one hand, locking down economies to fight the virus has led to tremendous financial loss. At least 100,000 businesses have gone under in the USA alone, not to mention the rest of the world, and tens of millions of Americans are now unemployed with no way to earn a living. The government has responded to this by releasing stimulus packages such as the CARE Act, which are designed to keep people afloat, but these funds won’t last indefinitely and thus the government has had to continue the stimulus.

In fact, because of the stimulus and unemployment checks, many Americans are earning more money at home not working than they were when employed. But if the government continues the stimulus, it will create inflation. If it doesn’t, it will create an economic deflation. While the manner in which this will be resolved remains to be scene, both scenarios favor gold.