Gold price still on pace to push above $2,000 as stagflation, recession risks rise - In Gold We Trust

5.26.22 - Gold price still on pace to push above $2,000

Gold last traded at $1,850 an ounce. Silver at $21.95 an ounce.

News Summary: Precious metal prices remained stable Thursday as investors weighed the latest U.S. economic reports and upbeat earnings. Stocks higher as Wall Street tried to rebound from a long string of declines.

Kitco-"While the gold market remains off its highs from the first quarter, it is still on track to end the year above $2,000 an ounce and push close to $5,000 an ounce by the end of the decade, according to the latest In Gold We Trust Report.

In its annual gold outlook, analysts at Incrementum AG remain bullish on gold as rising inflation threatens to push the global economy into a recession and create a stagflationary environment. The European investment firm issued a warning, saying that normalizing monetary policies worldwide is started to expose major issues in the global economy that were papered over by loose monetary policies and massive amounts of liquidity.

'Just as in 2018, when we warned of the inevitable consequences of the attempted turning of the monetary tides, we are now issuing another explicit warning. In addition to wolfish inflation, a bearish recession now looms,' the analysts said in the report...

With the threat of stagflation looming large, the analysts noted that most investors are inadequately positioned to protect their capital as the traditional 60/40 portfolio structure is expected to see negative returns for only the fifth time in 90 years.

With inflation expected to hold above 5% through 2022, Incrementum said that equity markets could see further losses this year. The analysts said that holding precious metals has proven to provide a cushion for those losses. So far this year, the S&P 500 has lost 18%, dropping below 4,000 points; however, gold prices are up 1% on the year as prices push back above critical resistance at $1,850 an ounce.

'The historical performance of gold, silver and commodities in past periods of stagflation argue for a correspondingly higher weighting of these assets than under normal circumstances,' the analysts said. 'But also, the relative valuation of technology companies to commodity producers is an argument for a countercyclical investment in the latter.'"