Gold the big beneficiary
Deep in the trick box
Like with a drug addict the year 2020 has been all about stimulation. We of course mean the economical but the two have their similarities. Like a drug by now the regular dose just doesn’t cut it any more. More is needed and the search for a new way to stimulate is in full swing. So far very original ideas like deeply negative rates or MMT seem like the way to go. The tension between deflation and inflation is growing larger by the day. It seems that me might see a comeback of inflation due to the current lockdown and Covid policies around the world. These policies centre not only on lockdowns but as we all know also feature massive injections of liquidity. To keep this fine mess of a ship afloat we need inflation, and they will do everything they can to achieve it.
Gold on the rise
While all of this might sound like a lot of doom and gloom for many of us, it is the perfect scenario for gold. With gold being a metal and therefore not able to be inflated it is a great safeguard for your wealth when inflation runs ramped. We have looked at the possible developments of the gold price for the next decade by looking at different M2 growth rates from before gone decades. We find that a gold price of $ 4800 at the end of this decade would not be crazy at all. The distribution is leaning the right, so an even higher price would also be possible.
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