The new reality & gold
Comparisons to the 70s
We are currently looking at multiple crises merging into a big one. In the 1970s, aggressive rate hikes and a recession with a longer period of stagnation in the market finally killed inflation. The current rate hikes are probably too insufficient to challenge inflation. What they are doing is shutting down the economy. Since hope is the last virtue to go, the market still expects a U-turn at some point. Many others think that Powell is set on his hawkish plans. This will soon get the Federal Reserve in trouble, since the deficit is at an all-time high. All signs are currently pointing to a deep recession in the US and an even worse one in Europe. The question is, what does that mean for gold?
The new reality
While everybody in the US is still obsessed about FED policy, the ground is shifting in a different direction. First during Covid we saw a big shift towards fiscal spending and the government taking direct action. Now we are seeing big steps towards de-dollarization and the power shifting to those nations who hold resources. Monetary change is something inevitable and in all those major changes, gold played a big role. So, we should also expect it to play a big role now. And we are seeing moves towards that, with both China and Russia prioritizing gold to a far greater extent, than the west. The resulting inflation and loos of confidence in paper money will certainly be good for gold.
Here you find the Video
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