2020 will undoubtedly go down in the history of the world and mankind, but it will also go down in the history of the financial markets, as we have experienced the greatest economic shock since the Great Financial Crisis over a decade ago.
The COVID-19 epidemic shook many markets that seemed to be making up for losses in the second half of the year. We will look at those that seemed to be gaining the most and those that were not doing well this year. The defensive hand of the crisis is the silver market. The price of an ounce of this metal has increased from the beginning of 2020 to the present day by more than 45%. However, before the price started to rise, we had seen the lowest levels since 2009. Silver, as an industrial metal, but also as an investment metal, started to become more expensive along with better economic data from China, where the industry recovered very quickly after the restrictions introduced earlier. Moreover, during the ongoing pandemic, it is this branch of the economy that seems to be the most resistant to lockdown, and infrastructure programs can increase demand for industrial metals.
The American stock exchange did not fail in 2020 either. Many companies, especially technology companies, have benefited from the fact that people have stayed at home, switched to remote work and home entertainment. Thus, since the beginning of the year, the Nasdaq 100 index has risen by more than 44 percent. Far behind this list was the S&P 500 index, with a rate of return of about 14 percent and the Dow Jones Industrial Average, which seems to be growing since the beginning of 2020 by only 5.6 percent. The popular in Europe DAX has made up for the losses incurred during the year and is on a 2.5 percent plus.
Returning to the best-performing markets, the Nasdaq 100 index was followed by gold. The price of yellow metal has increased since the beginning of the year by more than 20 percent. Investors, on the one hand, seemed to look for safe assets for difficult crisis times, and on the other hand, they could look for alternatives to paper money, the supply of which has increased enormously. There were also fears of future inflation and negative real interest rates, which could also help the price of gold.
The market, which has not yet risen after the shock, appears to be oil. The price of a barrel of WTI oil is over 20 percent lower than a year ago. Nevertheless, the prospect of an effective vaccine and a return to normality in the summer season may be favourable to prices in 2021. OPEC+ flexible policy helps to eliminate supply glut and may contribute to market stabilization and systematic price increase.
However, none of these markets have been able to beat bitcoin. The world's most popular cryptocurrency has risen by more than 220 percent, beating its record of all time in 2017.
We will be writing about what 2021 can bring after the New Year, and another comment will be published on January 4. Merry Christmas!
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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