As the coronavirus spreads and the prospects for a vaccine, or treatment, are months in the making, it appears the economic impact will be substantial and we would not be surprised to see the longest economic expansion and bull market in history to come to an end in 2020.
However, as markets continue to gyrate, gold investors must not lose sight of the bigger picture. For over a year the primary driver of the gold price has been falling real rates. Through the coronavirus crash, ten-year Treasury yields have plummeted to all-time lows. With the markets in disarray, gold has not responded to this fall in real rates. Once the volatility subsides, we expect real rates to again become a primary driver of higher gold prices.
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