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LAWRIE WILLIAMS: ‘In Gold we Trust’ 2022 released – $4,800 gold by 2030 prediction still intact

Keen gold analysts will be pleased to know that the latest edition of Incrementum AG’s hugely comprehensive ‘In Gold we Trust’ annual treatise has been released and is available for free download in various forms and languages as follows:

English:
In Gold We Trust report – English (390 pages)
Compact Version – English (26 pages)

German:
In Gold We Trust-Report – Deutsch (420 Seiten)
Compact Version – Deutsch (26 Seiten)

Spanish:
Compact Version  Spanish (26 Pages)

Video with the key takeaways of the report
English version 
Deutsche Version

International press releases:  
Press Release (English)
Pressemitteilung (Deutsch)
Comunicado de prensa (español)

For the follower of the gold sector this is probably the most comprehensive report on gold freely available to the general public and is packed full of statistics, graphics, tabulations and opinion relevant to all aspects of gold supply and demand together with price projections.  It has now been published annually since Ronald-Peter Stöferle  prepared its first edition, originally for Austria’s Erste Bank, some 16 years ago and has been one of the most followed annual treatises on the global gold market ever since.

This latest issue, inter alia, takes a detailed view on what the seemingly inexorable move of the global economy into a period of stagflation means for us all, and its likely effects on the equities markets, U.S. Fed policy and the future price of gold.  Back in 2020, the report’s authors were predicting a gold price reaching around $4,800 by the end of the current decade, and this view has not changed.  In order to achieve this they see the yellow metal’s price reaching around $2,200 in the current year – a very similar level to that of our own latest price forecast of a month or so ago.

So what is stagflation and how does it contribute to this kind of rising gold price scenario?  Briefly it was a term coined in the UK back in the early 1970s during a period of stagnant economic growth coupled with high inflation, in turn brought about by high energy prices.  Does that look familiar as being representative of the current economic environment.  We have even gone on record as suggesting that this time around it may even be the precursor of recession, an even worse economic scenario, although in the past stagflation has seldom been followed by recession but ....currently who knows?

Certainly in the U.S. in particular, and in a pattern which is being followed by the Bank of England and, most likely, also by the European Central Bank, there is a strong programme already being initiated of Quantitative Tightening and strong interest rate rises to try and bring inflation under control, which could well have a recessionary impact without necessarily reducing the inflationary pressures that significantly.  There is, though, the strong opinion held by a number of commentators and economists, and by the authors of the ‘In Gold we Trust’ report too, that the Fed will not follow through to the year-end with its more hawkish rate rise programme and will be forced into an about-turn later in the year in the face of a severe collapse in equity prices.  This will be brought about as the markets take into consideration the likely effects on businesses of higher interest rates coupled with a downturn in general economic activity due to the ongoing ravages of inflation.

If this is indeed the case then there would be a likely recovery in both equities and precious metals towards the year end due to what may well be a short-lived period of economic optimism.  This could represent the proverbial calm before the economic storm which we fear may await with the onset of a severe recession which would devastate equity prices – particularly for those which have been verging on illiquidity for some time.  Gold may well do rather better, though, as the ultimate safe haven as the ‘In Gold we Trust’ authors expect, although their predicted path to a higher gold price is more slow and steady than the rapid rise predicted for many years now by some of the out and out gold bulls.

The 390-page report obviously covers far more than its coverage of inflation. stagflation and its gold price projections.  Other analysis looks deeper at the causes of the current inflationary pressures, with the Russia/Ukraine war having a huge impact, thereby putting global monetary policy strongly on the defensive in its attempts to counter inflation without driving the whole world into recession – probably without success.

Markets are transitioning almost overnight from ‘bubble’ to crash with the reality of the strength of the U.S. anti-inflation measures threatening to provoke an equity market crash.  So far huge equity falls have been tempered by perhaps less significant recoveries with the overall trend downwards and it seems unlikely to the report’s authors and contributors that moves by central banks to bring their respective economies under control can be achieved without some serious casualties developing.

In effect all this adverse economic projection is due to the virtual inevitability of continuing inflationary pressures ahead..  There is, in effect, a new ‘Cold War’ in the making in Europe – and perhaps in the Far East too if China seizes the opportunity to initiate one as well - and an overall move towards ‘de-globalization’.  The world is entering an enormous de-carbonization cost phase too in response to global warming fears, with a wage-price spiral likely developing as a consequence.  There may well be several such global inflationary phases to come.

These scenarios envisage changes to conventional investment strategies which may no longer apply.  Commodities may benefit the most – history tells us that this may be the case and the ultimate safe haven asset, gold, could benefit strongest of all – particularly if rumours of a gold-backed reserve currency being developed by Russia and China turn out to be accurate.

25 May 2022 | Categories: Gold, China, Russia, US, FOMC, UK, inflation, stagflation

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