Gold prices might surpass previous records this year.
In the face of mounting inflation concerns and economic uncertainties, gold has emerged as a safe haven for investors. Mark Valek, a partner at asset manager Incrementum and co-author of the "In Gold We Trust" report, has been advocating for gold as a protection against inflation since 2013.
Valek, who previously worked at Raiffeisen Capital Management for ten years, expects waves of inflation in the medium term, with the first wave possibly nearing its end. In line with this view, significant purchases of gold mines have been made recently, making them the largest position in Incrementum's Inflation Diversifier Fund. The gold price forecast for 2030, according to Valek, is $4,800, around 170% higher than today, but this does not assume a risk scenario of significantly high positive real interest rates.
Central banks are facing a challenge in raising interest rates due to high public debt in some Eurozone countries and the US. The ongoing deglobalization, massive rearmament, and a fundamental shift in the entire energy industry make a return to a long-term trajectory of two percent inflation and stable inflation unlikely. As a result, gold, which doesn't need to pay interest because it has no bankruptcy risk and will increase in the long run in the fiat money system, is seen as a viable option for value preservation and medium of exchange.
The US is currently in a technical recession with high inflation rates, and the Fed has not shown signs of pausing its interest rate hikes yet. This economic environment has been especially compelling for increasing gold allocations, as UBS anticipates gold reaching $3,500 by December 2025.
However, it's important to note that specific forecasts from Mark Valek amidst expectations of stagflation and ongoing central bank interest rate hikes are not detailed in the available search results.
Gold mines are currently struggling with inflation on the cost side, but if the macro scenario develops as expected, with energy prices falling and the gold price rising, these are fantastic entry prices for investment. On the other hand, if the ECB were to raise interest rates too much and southern Eurozone countries faced financing problems, a Euro crisis 2.0 could occur.
In July 2022, Incrementum's inflation signal signaled that the rising inflation momentum seems to be over for the time being. Despite this, gold has done relatively well in euros compared to other asset classes, but has been in the negative in dollars this year.
In conclusion, gold remains a crucial asset in times of crisis and inflation, and its value as a safe haven is becoming increasingly apparent in today's volatile economic climate. As central banks grapple with rising inflation and the challenges of raising interest rates, investors are turning to gold as a reliable store of value and hedge against economic uncertainty.
Financial investors are increasingly turning to gold as a reliable store of value and hedge against economic uncertainties, such as inflation, due to its status as a safe haven. In line with this trend, Incrementum, an asset manager, has recently made significant investments in gold mines, viewing them as a protection against rising inflation rates.
