COVID-19: A Second Wave?

Goldex Team

Editorial content

The question a lot of people are asking, is, could we see a second wave of COVID-19? The markets certainly aren’t ruling it out. On July 1, fears of a second wave meant gold hit record highs, trading above $1,800 per oz for the first time since 2011 – the year of the European sovereign debt crisis. Monthly gold imports from Switzerland to America are also at a record high of 127 tonnes.

Governments are already providing unprecedented financial support to businesses hit by the coronavirus crisis – and that’s everything from tourism to aviation to hospitality. They now need to prepare for the new normal. That means not just getting out of the current economic slump but finding ways to support business through future outbreaks. A second wave would also hit consumer confidence and spending.

History repeating

There’s a famous historical precedent for a second wave that has experts worried. The notorious Spanish flu pandemic of 1918/19 killed an estimated 50 million people across the world and came in three separate waves.

The first wave arrived in spring. The second, and the deadliest, came during autumn, with a final wave throughout winter and spring 1919. So, with time ticking on, it’s inevitable that many are worrying about the months to come.

Case rise

Following lockdown easing, cases in several countries have inevitably started to rise again. In some countries, such as Germany and China, local spikes have been successfully smothered with rapid testing, tracking and tracing action – and, in some cases, localised lockdowns.

And in places like India and the US, early lockdown easing has led to record case numbers. In fact, many say that the first wave is nowhere near done. “When you have 20,000-plus infections per day, how can you talk about a second wave?” said Dr Anthony Fauci of the National Institutes of Health at the end of June. “We’re in the first wave. Let’s get out of the first wave before you have a second wave.”

What’s a second wave?

What a second wave would actually look like isn’t set in stone, either – there’s no official definition of ‘second wave’. Most experts agree that you’d need to see a sustained rise in infections following a period with very few or no infections.

So, at the time of writing, countries such as New Zealand have experienced cases following a period of new infections – but those cases haven’t risen rapidly, thanks to quarantine policies. The country that’s come closest to the unofficial definition of second wave, many agree, is Iran. One of the first countries to be infected, it’s now experiencing a rise in cases following a sustained fall in April and May.

Super spreaders

And there are other factors apart from lockdown easing that could bring about a second wave. Many countries in the developing world do not have the capacity to set up effective public health measures. Then there’s seasonality, for example. Coronaviruses such as the common cold spread far more easily in the winter months, as do flu viruses.

Prof Jonathan Ball, a virologist at the University of Nottingham, told the BBC: “A second wave is almost inevitable, particularly as we go towards the winter months. The challenge for government is to ensure the peak isn’t so much that it overburdens the healthcare system.”

Wait and see

But not everyone agrees. “The concept of a second wave is flawed and creates dangerous misconceptions about the pandemic,” Jeremy Rossman, honorary senior lecturer in virology at the University of Kent wrote in The Conversation.

He says we don’t know if COVID-19 is even a seasonal virus. And, he adds: “The concept of a second wave implies that it is something inevitable, something intrinsic to how the virus behaves. It goes away for a bit, then comes back with a vengeance.

“But this idea fails to take into account the importance of ongoing preventative actions and portrays us as helpless and at the whim of this pathogen.”

Effective prevention

Rossman points out that we now know far more about the virus and what we can do to effectively prevent it spreading, both on a personal level and in wider society – from hand-washing and social distancing to an effective trace, track and test system. Those could be crucial factors to prevent a second wave.

It’s just too early to say with any certainty whether a second wave is coming – and, of course, an effective vaccine could stop the virus in its tracks.

But while the world waits for the next stage in the coronavirus pandemic, and uncertainty in markets grows, we’re likely to see one spike rise even higher – and that’s gold prices.

Important disclaimer: this document is not an official research report and the views expressed in it are those of the authors. The authors are not registered research analysts and there is no assurance the trends mentioned will continue or that the forecasts discussed will be realised. Gold as a commodity is not a specified investment for the purpose of giving advice under the Financial Services and Markets Act 2000, therefore, this does not give rise to rights to claim compensation under the Financial Services Compensation Scheme.