While the gold market remains off its highs from the first quarter, it is still on track to end the year above $2,000 an ounce and push close to $5,000 an ounce by the end of the decade, according to the latest In Gold We Trust Report.
In its annual gold outlook, analysts at Incrementum AG remain bullish on gold as rising inflation threatens to push the global economy into a recession and create a stagflationary environment. The European investment firm issued a warning, saying that normalizing monetary policies worldwide is started to expose major issues in the global economy that were papered over by loose monetary policies and massive amounts of liquidity.
“Just as in 2018, when we warned of the inevitable consequences of the attempted turning of the monetary tides, we are now issuing another explicit warning. In addition to wolfish inflation, a bearish recession now looms,” the analysts said in the report.
Incrementum pointed out that of the Federal Reserve’s last 20 tightening cycles, only three have not ended in a recession.
“The Federal Reserve runs the risk of overestimating the impact of rate hikes and balance sheet reductions on containing inflation, just as it has underestimated the impact of rate cuts on boosting inflation,” the report said.
With the threat of stagflation looming large, the analysts noted that most investors are inadequately positioned to protect their capital as the traditional 60/40 portfolio structure is expected to see negative returns for only the fifth time in 90 years.
Source: Kitco News