Gold, The Tried-and-True Inflation Hedge For What’s Coming!

Global confirmed coronavirus cases surpassed 100 million this week. There is no denying that the coronavirus pandemic has caused tremendous hardship and loss. To mitigate new cases climbing further, stricter lockdown and travel restrictions are being announced and implemented, with the curfew in the Netherlands as an example. Lock-down fatigue, as evidenced by the riots against this implemented curfew, is growing. Through it all, hope is on the horizon as vaccine roll-out plans are being implemented. Many governments continue to aim for herd immunity by autumn of this year.

Massive fiscal and monetary stimulus has been pumped into economies around the world to help ease the economic devastation for both individuals and businesses. Building on hope for herd immunity being reached and restrictions being lifted towards yearend, the question arises: Is CPI inflation on the horizon?

Central banks are generally forecasting inflation to be in the range of their 2% targets for the next several years, and although, inflation expectations have risen sharply since the March 2020 low, they are still not out of line to pre-coronavirus levels. 

Below are four reasons that we expect higher inflation over the next several years.

  • Money Supplies have risen dramatically. Central bank asset purchase programs are rapidly increasing money supplies. For example, US M2 measure of money supply (includes currency in circulation, current accounts, savings deposits, small-denomination time deposits and retail money market funds) increased more than US$3.7 trillion (almost 25%) in 2020.In the Eurozone, this measure climbed by US$2.6 trillion and in the UK by almost US$600 billion – just those three equate to US$7 trillion in additional money sloshing around. To be sure, much of this money has been put into assets, i.e. equity markets and houses. Hence, record high equity markets, and soaring house prices, despite the coronavirus-induced economic downturn. This asset price inflation will be followed by general price inflation. 
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Linda Willis 1 month ago Member's comment

Copper will follow Lumber from 2020....Spot Copper IMO at some point(the months ahead 2021) as infrastructure ramps up to rebuild economies...will be here, then absolutely there will absolutely NONE and spot price of Copper will spike above $6.00USD/lb. that is a huge number....inflation will bust out, then then debt of World starts to break...$19 Trillion and counting thx to COVID, who is going repay any and/or all of this debt.

Gold will benefit....