IS GHANA TORN BETWEEN GOLD AND OIL?

THE “GOLDSTREET” BUSINESS NEWSPAPER TODAY REPORTS THAT GHANA BENEFITS FROM A SURGE IN THE PRICE OF GOLD. TO READ THE WHOLE ARTICLE, VISIT:¬†https://goldstreetbusiness.com/business/ghana-set-to-benefit-from-gold-price-surge/ BUT ON THE OTHER HAND, OIK PRICES ARE GOING SOUTHWARDS. IS GHANA TORN BETWEEN GOLD AND OIL?

INVESTORS SEE GOLD – AMONG OTHER INVESTMENT OPPORTUNITIES – AS A SAFE HAVEN. WHENEVER THERE IS – OR SEEMS TO BE – A CRISIS, INVESTORS FLEE CRISIS-PRONE INVESTMENTS LIKE STOCKS. DUE TO THE CORONA VIRUS FEARS, THE U.S. STOCK MARKET DJIA LOST NEARLY 2000 POINTS OR 7% OF ITS VALUE IN THE LAST TWO DAYS. INVESTORS THEN RUSH INTO GOLD, AMONG OTHERS. CONSEQUENTLY, THAT PUSHED THE GOLD PRICE UP TO NEARLY 1700 US-DOLLARS AN OUNCE. OF COURSE, AS THE WORLD’S LARGEST GOLD PRODUCER, GHANA WILL BENEFIT FROM THIS SURGE.

BUT ON THE OTHER HAND, THERE IS OIL. OIL IS A VERY CRISIS-PRONE COMMODITY. WE HAVE SEEN THAT IN THE RECENT U.S.A.-IRAN CONTROVERSY. IT BROUGHT THE PRTCE OF OIL DOWN SIGNIFICANTLY.

AND NOW, THERE IS THE CORONA VIRUS, WHICH ORIGINATED IN CHINA. CHINA HAS THE HIGHEST DEMAND FOR OIL WORLDWIDE. THIS DEMAND IS CUT DOWN¬† LARGELY DUE TO THE CORONA VIRUS. ACCORDING TO THE DEMAND/SUPPLY THEOREM, A LOWER DEMAND LEADS TO LOWER PRICES FOR THE COMMODITY. SUPPLIERS CANNOT ASK FOR HIGHER PRICES, BECAUSE THE COUNTRIES WON’T PAY THOSE PRICES FOR COMMODITIES THEY DON’T NEED.

THEREFORE, GHANA SEEMS TO BE IN A DILRMMA. HIGH GOLD PRICE ON ONE HAND, LOW OIL PRICE ON THE OTHER. BUT, WE SHOULD SEE THIS “DILEMMA” AS A POSITIVE DEVELOPMENT. GHANA IS IN A UNIQUE POSITIVE POSITION. HIGH GOLD PRICES COMPENSATE FOR LOW OIL PRICES, AND VICE VERSA WHEN THE CRISIS IS OVER. I AM ABSOLUTELY SURE THAT THE GHANAIAN GOVERNMENT TAKES MEASURES THAT THE COUNTRY WON’T SUFFER FROM TOO DEEP PLUNGES. NEGOTIATING FUTURES CONTRACTS CAN BE ONE OF THE SOLUTIONS.

SO, IS GHANA TORN BETWEEN GOLD AND OIL? I WOULD SAY NO. IT’S AN OPPORTUNITY THAT WE HAVE SUCH DIAMETRICALLY OPPOSED COMMODITIES IN THE COUNTRY. AND WE SHOULD MAKE THE BEST OUT OF IT.

STAY TUNED FOR MORE INFORMATION ABOUT THE INFLUENCE OF THE CORONA VIRUS ON THE ECONOMY IN GHANA!

 

 

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