A Catalyst for Collapse
Inflation, FED intervention, Equities vs Commodities and considerations on the mitigation of risk in uncertain times
Gold, like other commodities, is not in itself immune to a decline in demand and price. Gold dips have happened several times in history along with two significant sides; both the good and the bad.
Earlier this year—March specifically—gold hit an ATL of $1,678. The last time gold went this low was in the middle of April 2020. This sharp decline shook the gold industry and threw some fractional investors into FUD.
According to analysts, how some fractional investors sold their gold due to FUD was the reason the dip lasted for quite a long while.
Aside from the activities of opportunistic investors, the other major factor that brought gold to its ATL this year was how The United States Federal Reserve made massive gold selloffs.
Furthermore, the Covid-19 pandemic influenced investors to buy gold as a haven. However, as the impact of the Covid-19 pandemic was declining, investors withdrew their fractional gold investments to other areas like bonds, blockchain, and startup investments.
Having discussed that, what happens whenever gold dips? How has it still maintained its value despite seasonal declines?
Perhaps what makes the gold market different from other assets or commodities is how it usually corrects itself. This is it in simpler words: usually, when gold dips, its price automatically comes back to its earlier position within a matter of days or weeks.
The major factor that influences the correction of gold is that it will always be in demand, may the demand be relatively high or quite low. The jewelry industry, central bank reserves, blockchain-based gold ETFs are parties to this.
With the advent of digital gold, like the Xbullion token, the attention of most private and institutional demand to invest in such has rapidly increased. Of course, an increase in the purchase of this gold-backed digital gold will have a corresponding increase in the physical gold.
This and many other factors are the reason the gold market will always correct itself when it dips. The gold dip in March corrected within almost a week. And as of the time of writing this report, the price of gold per ounce is $1,780 - with much propensity to surpass $2k soon.
This relatively quick correction of gold is an attribute that has won investors over time. Its recovery from dips is not only evident in this year alone. Gold has a strong historical backing of always being back on its feet.
Looking at it from a long-term perspective, gold has appreciated 5000% since 1970. The fact that gold has spiked in appreciation even despite a lot of market frictions over the years further confirms the authenticity of its market correction.
The modern leveraging of the traditional gold market to blockchain technology has birthed the advent of digital golds like the fast-rising Xbullion token. Xbullion beats the competition and provides investors with fractional gold ownership at the best rate.
In the next two weeks, Xbullion is going to be listed on a leading exchange, follow us Twitter, Linkedin, or Facebook to receive first-hand information on this listing.
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