Buffalo, N.Y. (WBEN) - The gold market is going gangbusters this year, and Scott Hunt from Jack Hunt Gold and Silver told us why.
"The biggest factor driving this is sovereign central banks buying massive
amounts of gold reserves for their countries. In the last year, over a thousand
tons of gold have been purchased by an array of central banks across the world," Hunt said with WBEN on Thursday.
Usually, a spike in gold is a red flag or indicator of turbulent times. However, we are seeing a surging stock market and surging precious metals.
Does that mean something has to give?
"Look, what goes up must come down," said Hunt. "Precious metals are considered a safe haven asset where people are choosing to invest in that as a way to hedge against market volatility. To see it at the same time as the stock market is rallying is unusual."
It's not just gold, but silver too.
"On Jan. 2, the first trading day of this year, silver closed at $29.57 an ounce. [Wednesday], it was $48.81 cents an ounce. That is a dramatic rise," Hunt noted.
To put it in perspective, gold was $2,000 dollars in August of 2020. It hit $3,000 for the first time in March of this year, and it broke $4,000 earlier this week.
Many people are thinking of cashing in on the rally.
If someone were to sell an item, Hunt says it's a very simple formula.
"A dealer will look at the item, and weigh it. They will look for markings or test it for its purity," he said. "They'll take the weight, and multiply it by the purity and multiple it by a factor of the spot price so they can make a profit. That factor depends on the dealer."
Hunt says he can't say for certain, but it could be a once in a lifetime opportunity. The last time there was a rally in gold was 2011. Before that, it was 1980.