Page 18 - Bullion World Issue 10 February 2022_Neat

Bullion World | Issue 10 | February 2022

US INFLATION AND GOLD PRICE OF LAST 50 YEARS

Source: Augmont Research, Bloomberg

On the other hand, Gold has yet percentage of gold demand money-printing-levitated stock
to reflect this new environment in • Inflation was accompanied by markets trading at dangerous
which significantly more dollars expanding economy bubble valuations are in big trouble
are buying up prices everywhere. • Gold ETF Outflows of 270 as repeated price increases eat into
Even though the CPI was up 7% tonnes company earnings and revenues.
YoY, reflecting the most significant • Risk-On assets Out- Gold investment demand will surge
price increases since June 1982, performance when stock markets recover.
gold merely averaged $1792 in
December. Monthly gold prices It is undeniable that gold did
increased by 4.3% over a 19-month Again, a couple of essential horribly during the 2021 inflationary
period in which the headline CPI variables explain gold's lack of rampage. In 2021, inflation will
inflation rate increased by 59.7 reaction to this galloping inflation be higher than in 1970, when it
times. Given the current economic thus far. Gold was severely reached more than 12%. Gold's
condition, that is a poor showing. overbought after rocketing to all- rates of return were low at the start
time nominal highs in the summer of that decade, and it wasn't until
Historically, gold tends to rise of 2020; therefore, it needed a inflation expectations de-anchored
during the interest rate hike reasonable and healthy significant for good that gold began to
cycle, especially when economic decline to rebalance emotions. increase fast in the late 1970s.
growth in the US begins to slow And the record-high stock markets,
down. Despite an accommodative which the Fed's extraordinary Now going into 2022, many things
monetary tailwind that lifted most monetary deluge has directly have changed,
assets higher in 2021, Gold lost 5% driven, have dampened enthusiasm • Interest rates expectation have
of its value. Despite deeper Inflation in carefully diversifying stock-heavy moved sharply higher
concerns, Gold did not perform as portfolios with gold. • Anticipation of the fed pivoting
an inflation and currency hedge in to tighter monetary policies
2021 due to the following: However, gold's high consolidation • Cryptocurrencies subsequently
has run its course, and with a lost over one-third of their total
• the existence of significant breakout looming, both market cap,
cryptocurrencies and their 3 emotion and technicals predict • The collapse of many other
trillion dollar market cap may that the next bull upleg will begin commodities
have siphoned off a good marching shortly. And these

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