Gold Outlook 2021

Gold last traded at $1,868 an ounce. Silver at $25.80 an ounce.

NEWS SUMMARY: Precious metal prices rose sharply Tuesday on safe-haven buying and a flat dollar. U.S. stocks cheered President-elect Joe Biden's inauguration, as strong corporate earnings boosted sentiment on Wall Street.

 World Gold Council--"Looking ahead, we believe that investors will likely see the low interest rate environment as an opportunity to add risk assets in the hope that economic recovery is on the immediate horizon. That said, investors will likely also be navigating potential portfolio risks including: ballooning budget deficits, inflationary pressures, market corrections amid already high equity valuations.

In this context, we believe gold investment will remain well supported while gold consumption should benefit from the nascent economic recovery, especially in emerging markets....

Investors' preference for physical and physical-linked gold products last year further supports anecdotal evidence that, this time around, gold was used by many as a strategic asset rather than purely as a tactical play....

Many investors are concerned about the potential risks resulting from expanding budget deficits, which, combined with the low interest rate environment and growing money supply, may result in inflationary pressures. This concern is underscored by the fact that central banks, including the US Federal Reserve and European Central Bank, have signaled greater tolerance for inflation to be temporarily above their traditional target bands.

Gold has historically performed well amid equity market pullbacks as well as high inflation. In years when inflation was higher than 3%, gold’s price increased 15% on average. Notably too, research by Oxford Economics shows that gold should do well in periods of deflation. Such periods are typically characterized by low interest rates and high financial stress, all of which tend to foster demand for gold.

Further, gold has been more effective in keeping up with global money supply over the past decade than US T-bills, thus better helping investors preserve capital."