RE:RE:The Chart
Gone shopping lately? Since gold hit it's all-time high the price of most things we need has gone up from 10 to 20% or so. Housing, food and fuel in particular, but vehicles, appliances (if you can find what you want), and the equity markets through 2021 all inflated up in price, so the real question is has gold kept pace with inflation or accrued additional price reflecting the systematic global a financial risks posed by inflation? Answer: gold has lagged and looks weak and underpriced.
US dollar stands in the way. But the dollar has challenges on many fronts, in particular the mammoth Federal debt and the major threat to the Federal budget posed by the interest rate rises that may be necessary to combat inflation. Bottom line would seem to be that the Powell FED will be shown to be impotent, they are already falling behind, and the dollar will devalue as other central banks tighten more effectively. A scramble to dump US bonds and equities by foreign holders will batter the US dollar and light a fire under gold. Not absolute, but incremental and relative. The Canadian dollar,and TSE will be a beneficiary as well. And probably oil and gas and energy stocks, along with the metals and PM's.
Stagflation is my working model for later in 2022. Continued supply chain disruptions made worse by Chinese extreme shut-downs to put fake window dressing on their regime during the propaganda festival know as the Olympics, and continued variants of Covid globally, plus the revelation that in western democracies there is a hard-core percentage of vaccination resistors ... has scotched the prior idea of a booming recovery in 2022. Possible later, but a very interesting year ahead in both US markets and politics.
Should be good for gold and gold equities but expect headwinds from broad equity market sell-offs?
The curse of interesting times.
CG