Sprott is proud to be a sponsor of Incrementum's 2023 edition of its annual In Gold We Trust report.
The time factor is significantly underestimated in terms of the impact of interest rate hikes. In view of the precarious debt situation in many industrialized countries and the rapid tightening of monetary policy, especially in the US, the authors expect a recession and a monetary policy showdown in the next 12 months.
Due to the increasing fragility of banks, the real economy and financial markets, a monetary policy showdown will ensue in view of the weakening economy and the fact that core inflation rates remain significantly too high. A departure from restrictive monetary policy would have far-reaching consequences for inflation, central bank confidence, which is already under attack, and the gold price.
Even though inflation rates in the US and the eurozone have fallen recently, the authors assume that another wave of inflation will follow and that the environment of “Stagflation 2.0” — the title and leitmotif of the In Gold We Trust report 2022 — will accompany us. Arguments such as demographics, the increased focus on fiscal policy, greenflation, de-globalization and global rearmament speak for a structurally, and not merely temporarily, inflationary environment with high volatility of inflation rates and possibly several waves of inflation.
As early as last year’s In Gold We Trust report, it was strongly suggested that the freezing of Russia’s foreign reserves in February 2022 would go down as a historic moment in international monetary history. Record central bank demand for gold in 2022 was one of the responses. Structurally higher central bank gold demand will act as a key driver of the gold bull market.
Together, India and China have officially imported between 34,000 and 36,000 tons of gold over the past 20 years. China and India are also becoming increasingly important in terms of consumer demand. The two countries now account for 48% of consumer gold demand.
For the fourth time, the report specifically examines ESG issues in the mining equities sector. This year, the focus is on the social aspect of ESG.
The gold price “flirted” with a new all-time USD high again in the first half of the year, but failed to do so in the short term. While long-term indicators such as the Coppock indicator are still clearly bullish, shorter-term models such as the Midas Touch Gold Model™ and the seasonal patterns currently suggest a temporarily more cautious outlook, which could result in attractive buying opportunities.
Based on the assumption that a recession will occur, the authors consider new all-time highs of the gold price in U.S. dollars and prices of USD 2,300-2,400 within 12 months to be probable. They continue to adhere to the decade price target of USD 4,800 against the backdrop of the monetary, geopolitical and fiscal situation.
Past performance is no guarantee of future results. You cannot invest directly in an index. Investments, commentary and statements are that of the author and may not be reflective of investments and commentary in other strategies managed by Sprott Asset Management USA, Inc., Sprott Asset Management LP, Sprott Inc., or any other Sprott entity or affiliate. Opinions expressed in this commentary are those of the author and may vary widely from opinions of other Sprott affiliated Portfolio Managers or investment professionals.
This content may not be reproduced in any form, or referred to in any other publication, without acknowledgment that it was produced by Sprott Asset Management LP and a reference to sprott.com. The opinions, estimates and projections (“information”) contained within this content are solely those of Sprott Asset Management LP (“SAM LP”) and are subject to change without notice. SAM LP makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, SAM LP assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. SAM LP is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Please contact your own personal advisor on your particular circumstances. Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any investment funds managed by Sprott Asset Management LP. These views are not to be considered as investment advice nor should they be considered a recommendation to buy or sell. SAM LP and/or its affiliates may collectively beneficially own/control 1% or more of any class of the equity securities of the issuers mentioned in this report. SAM LP and/or its affiliates may hold a short position in any class of the equity securities of the issuers mentioned in this report. During the preceding 12 months, SAM LP and/or its affiliates may have received remuneration other than normal course investment advisory or trade execution services from the issuers mentioned in this report.
The information contained herein does not constitute an offer or solicitation to anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada or the United States should contact their financial advisor to determine whether securities of the Funds may be lawfully sold in their jurisdiction.
The information provided is general in nature and is provided with the understanding that it may not be relied upon as, or considered to be, the rendering or tax, legal, accounting or professional advice. Readers should consult with their own accountants and/or lawyers for advice on their specific circumstances before taking any action.
© 2023 Sprott Inc. All rights reserved.
You are now leaving Sprott.com and entering a linked website. Sprott has partnered with ALPS in offering Sprott ETFs. For fact sheets, marketing materials, prospectuses, performance, expense information and other details about the ETFs, you will be directed to the ALPS/Sprott website at SprottETFs.com.Continue to Sprott Exchange Traded Funds
You are now leaving sprott.com and linking to a third-party website. Sprott assumes no liability for the content of this linked site and the material it presents, including without limitation, the accuracy, subject matter, quality or timeliness of the content. The fact that this link has been provided does not constitute an endorsement, authorization, sponsorship by or affiliation with Sprott with respect to the linked site or the material.Continue