Special Update Newsletter, January 5, 2021

The comments below are an edited and abridged synopsis of an article by MacNicol & Associates

This trend will continue because of inflation hedging. Gold enjoyed a great year in 2019 due to the dramatic spike in inflation across the world. Financial aid packages will minimize the purchasing power of almost every currency worldwide.

Special Update Newsletter, January 5, 2021 | BullionBuzz | Nick's Top Six
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Massive government assistance due to the pandemic dramatically increased the money supply in many countries. This devalued the purchasing power of most currencies, putting upward pressure on every other asset class. The US stimulus package last spring, among various other economic packages, equaled more than $3 trillion—not including the almost $1 trillion that is still in progress.

At-home investors caused stock prices to smash records after the markets fell in March. Stocks reached record levels; this was the fastest market recovery ever. Optimism helped investors and companies push the narrative that things would be okay, pushing up market prices. However, a year later, the western world is still not fully open.

Some believe the markets are currently overvalued by 20-30%, likely a result of interest rates, which are basically at an all-time low and will probably remain in this area until the pandemic is over.

With markets this volatile, a must-have asset in every portfolio is gold, which is always a great hedge against inflation.

The Fed says that it will not raise rates until significant recovery has been sustained. It will probably continue the fiscal/monetary policy of 2020 to prop up the economy, increasing the price of real assets. The Biden presidency will have higher aid packages and longer lockdowns as it tackles Covid-19. This will increase the gold price no matter how the vaccine rollout goes.

Gold offers a hedge against current market risk and currency inflation; its supply grows at a much slower rate than the money supplies across the world. This year should be good for gold holders.

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