IGWT Report Chartbook 2021

Monetary climate change!

Our leitmotif and title right at the beginning. Behind the much-discussed climate change, which is often very nebulous in terms of facts and figures, another change is emerging, the monetary climate change. The time of moderation is over. All norms and rules have been thrown overboard; we are sailing in uncharted waters. Money supply growth is at a record high, and the debt mountains will continue to skyrocket.

The new normal?

Not only is society experiencing a new normal, but inflation seems to have found a foothold again. Major inflationary drivers such as the FED’s new average inflation target or the new dominance of fiscal policy suggest that inflation will be with us for longer. Political problems and the congested supply chains of the global world only exacerbate this trend.

The status quo!

Gold, even if it sometimes doesn’t seem so, is still in a solid bull market. A comparison with the last bull market confirms this, but there is of course still plenty of room for improvement. We continue to hold on to the precious metal, also because the gold price is very strongly correlated with monetary expansion and negative real interest rates. While sentiment is extremely depressed, we see more and more central banks, companies but also private individuals buying more and more physical gold.

Silver?!

The picture is very similar for silver, except that silver is currently even more unpopular. However, here too there are fundamental developments that make us feel positive. On the one hand, there is the fact that silver also correlates strongly with inflation. Secondly, we see a stagnation in mining. This, in combination with the rising demand for silver, should have a positive effect on the price.

The phoenix from the ashes

The mining sector has risen like new! Massive cash flows and antifragility make the sector a perfect investment. Moreover, prices have not yet broken out. A comparison with the last bull markets shows that there is still a lot of unrealised potential.

Where are we headed?

Should inflation really prevail, as we postulate, then a golden future lies ahead. Gold and commodities are the perfect hedge here. One should also ask how long the current bubble can survive without bursting. In addition, we are at the beginning of a new commodity super-cycle, which is supported by the many infrastructure programmes. We therefore maintain our price target and point out that in technical analysis gold currently looks very promising.