GOLD. Year of great gains. Preserve wealth and enhance it.

Despite the challenging macro backdrop of supply chain issues, surging inflation and lingering pandemic risks, Bank of America strategists have noted that some of the investment flows into gold have been very resilient.

There are significant dislocations buried beneath headline inflation, interest rates and currency moves, raising the appeal of holding the yellow metal in a portfolio and supporting our $1,925/oz average gold price forecast for 2022,” BofA analysts said in a research note at the end of January.

Gold futures ended higher on Thursday, stretching their streak of gains to a fifth session in a row – the longest run of consecutive gains since November. The rise for the metal came in the wake of data showing the U.S. consumer price index rose by a more than expected 0.6% in January to 7.5%, a 40-year high. Gold's rise “underscores its status as safe-haven commodity, and an effective inflation hedge,” said Fawad Razaqzada, market analyst at ThinkMarkets.

The stock market bubble has burst. Widely owned companies such as PayPal -36%, Facebook -34% and Netflix -33% have been beaten down.

The remaining FAANGs have fared better, but it’s only a matter of time before they collapse too. They are simply mispriced, and no asset can swim against the tide forever, especially when the debt cycle is over.

With so much uncertainty, the case for gold is a strong one and you can watch the interview here. We thank Duncan for a thoughtful discussion and look forward to speaking to John Reade, Head of the World Gold Council, at the end of February. What he doesn’t know about the gold market isn’t worth knowing.

Ruffer played their cards well. They saw risk-on conditions return in late 2020, swapped a little gold for [redacted], bagged the profits and bought back their gold. Spectacular.

It is rare for gold to do well during bull markets, and by holding it, investors risk underperformance. This is why gold beating the S&P 500 is key, as it gives investors the confidence they won’t underperform. It’s happening, and I believe this could go on for some time yet.

I’m bullish.



Leave a Reply

Your email address will not be published. Required fields are marked *