The Implication of a New COVID-19 Surge

A new wave of COVID-19 cases is threatening to inflict more severe damage on the economy and potentially unhinge the financial markets.

Buy the safe haven of gold.

Cases of the highly infectious novel coronavirus have been rising since mid-September, with the number of infected persons increasing in 41 states during the first half of October. During that period, cases jumped 25 percent to total more than 8 million nationwide. As temperatures drop, infectious disease experts fear the spread may accelerate due to indoor gatherings and “COVID-19” fatigue.

All these ominous measures of the virus’ spread raise the possibility that some governors may try to slow its transmission by imposing new lockdowns. That, of course, would inflict more economic damage on businesses still trying to recover from shutdowns earlier in the year and squeeze earnings that underly stock prices. 

In contrast, the spread of COVID-19 makes it more difficult to mine, refine, and ship gold, resulting in a scarcity of new supplies just at a time when investor demand rises for the safe haven qualities of gold. 

During the worst of the stock market plunge in March, gold sold off as investors sought to raise cash, but it quickly recovered and was up 23 percent as of October 15, compared to a gain of just 8 percent for the Standard and Poor’s 500 Index of stocks.

Buy the safe haven of gold.