Many Investors Are Disappointed by Gold's Weak Performance. Are They Right?

The first 8 months of 2020 were a great time for the yellow metal. During that period, the price of one ounce of gold grew by 37%, from $1,520 to $2,075. Then came a predictable correction, spurred by the news that Covid-19 vaccines would hit the market earlier than expected.

Gold finished the year at $1,920/oz, which doesn't seem all that high compared to the August peak. However, this price alone represents a 25% growth in value.

Strange, isn't it? 2020 was one of the best years for gold in a century, and yet investors are upset. Why? Well, as they say, appetite comes with eating. Back in the summer, after the price shot past $2,000, large investment banks started to predict new rallies all the way to $2,300, $2,700, $3,000, or even $4,000.

What happens when everyone in the market is expecting the same event to happen? That's right, the opposite actually happens – and that's exactly what we witnessed in late 2020. If you disregard the forecasts we've just cited, those investors who bought gold early last year should be very pleased.

The most interesting part, however, is that in 2021, most fundamentals are very favorable to gold. Central banks continue printing money. There's nowhere to invest this money, because all the possible bubbles in the stock and real estate markets are already stretched to the limit. All the while, the Covid-19 pandemic doesn't show any signs of abating.

At the same time, in the first two weeks of January, we haven't seen any new forecasts promising gold at $3,000- $4,000 by the end of 2021. This means that there's a lot of potential for growth before investors decide to sell off and take profits.

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