In a report published Friday, Goldman Sachs confirmed its original July forecast that gold would hit $2,300 per ounce in 2021. The report named one of today’s hot topics as a catalyst for this jump: inflation.
According to FinancialTimes.com, Goldman Sachs warned in the report that “a key theme of 2021 will be a sharp steepening of the yield curve, which charts the difference in short-term and long-term interest rates, amid inflation concerns.”
The article also quoted U.S. Commerce Secretary Wilbur Ross saying, “I do think investors need to start thinking about inflation again.”
This has been a topic of growing concern with experts for some time, with one saying back in September, “For the first time in a long, long time I’m actually worried about inflation … I think we could easily see 5% to 10% inflation in the next four or five years.”
Historical data also validates their concerns. According to a study cited in the book This Time is Different by Carmen Reinhart and Kenneth Rogoff, it was found that national debt levels exceeding 90% of GDP are linked to significantly elevated levels of inflation.
Similarly, economist and researcher Peter Bernholz, concludes in his book, Monetary Regimes and Inflation, that government budget deficits cause hyperinflation.
A quick check of our country’s report card in these areas shows that our national debt is over 135% of our GDP and the deficit is the highest recorded in U.S. history – more than twice the level of the Great Recession.
The good news about inflation and even hyperinflation is the subsequent rise in physical gold and silver. Historically, both metals have seen tremendous gains during times of significant inflation, hyperinflation and even the fear of inflation.
The key is positioning your portfolio in gold and silver now. The studies noted above didn’t produce a reliable timeframe for inflation to occur, they just agreed that inflation was the reliable outcome under these conditions. Currently, experts believe inflation could be suppressed for a little while thanks to digitization and factors like new COVID-19 vaccines, while others think it could happen nearly overnight, which means a jump in gold could happen just as quickly.
Call us today to discuss the likely path of your clients’ portfolios as we face inflation and hyperinflation. We can even work directly with you and your clients to determine the most beneficial position in gold and silver based on their individual financial goals. Whether they are in need of wealth insurance or are looking for an investment that is likely to perform against any odds that our nation faces, there is likely a place for physical gold and silver in their portfolio.