Insights

2022 has been a difficult year for many asset classes. Markets were historically volatile, with higher-than-expected inflation, quickly rising interest rates, the Russia-Ukraine war and the threat of a global economic recession. 

The tough year continued in October for many asset classes, including gold and other precious metals. Gold demand, however, was strong in Q3 2022 as long-term investors took advantage of lower prices to build positions.

"The parabolic rise in the dollar contains the seeds of its own demise. The façade of dollar strength foretells a comeuppance for all currencies in the form of a steep devaluation in terms of gold."

Since Q2 2020, gold has held above $1,700 but in mid-September, a significant risk-off wave occurred, breaking nearly every risk asset lower. The primary causes were higher than expected inflation data forcing yields (especially real yields) and the USD higher, two important gold drivers.

It’s been a summer of doldrums for many asset classes. Precious metals lost ground as a liquidity crunch took hold in response to market declines and volatility. Gold declined 3.11% and silver fell 11.62%.

July was another difficult month for most asset categories and was characterized by selling capitulation into exhaustion. Much more aggressive Fed rate hike expectations relative to other global central banks were a significant cause of U.S. dollar (USD) strength and rising real yields, which adversely affected gold.

If the Fed is to abandon the practice of inflating financial assets, which would represent a secular shift in direction, substantial deflation lies ahead from which the purchasing power of gold is expected increase in real terms.

Gold continued to perform as a safe haven store of value in what has been one of the most challenging six-month periods for markets in decades. Gold has managed to stay above the $1,800 support level despite the broader market carnage.

Ted Oakley interviews Sprott's John Hathaway on the gold bullion and equities markets. Oakley and Hathaway discuss why investors should consider adding gold to investment portfolios and how gold affects portfolio diversification.

May saw selling across most asset classes and scant appetite for safe haven assets such as gold. However, gold bullion has outperformed many other asset classes YTD and continues to do its job. 

Just as we predicted the current wave of inflation in 2020 without going far out on a limb, we are also not going out on a limb with our announcement of persistent stagflation.

Gold held in ETFs has increased sharply this year as the safe-haven flight continues. April was tough on many investment sectors, with the S&P 500 Index down 8.80%, the Nasdaq Composite Index declining 13.37% and U.S. Treasury bonds falling 3.10%.

The price of gold has been treading water for 10 years while the investment fundamentals have improved dramatically. That is why, in our opinion, significant upside lies ahead for gold and related equities. 

Gold posted its all-time highest quarterly close on March 31, 2022, ending a volatile month that helped gold climb above $2,070 on March 8. While gold may have climbed back to its highs on safe-haven flows, other positive gold supports are definitely in play.

"The Russian-Ukraine conflict is probably one of the biggest macro drivers in the marketplace... Before Russia-Ukraine, the gold market had started shaking off the hawkish Fed rhetoric. Russia-Ukraine has just amplified gold's value as a safe haven asset."

Throughout history, gold has played a prominent role in the advancement of human civilization. Seen as a representation of the sun, of the gods and of true value, gold is a form of real money without counterparty risks. Learn about gold’s culture, uses and history.

Gold bullion is up 4.36% YTD through February 28, 2022, and silver bullion has increased 4.90%. Gold mining equities rallied. Investors sought safe-haven assets given the heightened concerns over rising interest rates and the escalation of the Russia-Ukraine conflict.

Stephanie Pomboy and Grant Williams interview a true legend of the precious metals industry, John Hathaway. The three discuss the Fed, inflation, the financial markets and the outlook for gold bullion and gold stocks. 

"I believe that we are on the cusp of a generational opportunity today. I would encourage every viewer to dust off their old notebooks and do a little research on precious metals mining companies, especially those that are well managed, with attractive balance sheets."

Gold reached a high of $1,848 in January, but slid following the Fed's exceptionally hawkish statements at the January FOMC meeting. Market risks are rising and we believe that gold, as it did in 2018, is likely to stage a breakout given its safe haven characteristics.

Based on historic patterns, gold's lengthy consolidation indicates that prices have the potential to rally sharply and quickly in the coming year. We explain why in our List of Top 10 things to watch for gold investors. 

With Fed policy taking a more hawkish turn, the fire hose of liquidity that has fueled market mania is being turned off. At this moment, it appears that confidence in the Fed and attraction to gold are binary.