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Inflation is likely to come - hedging is necessary

Hans-Werner Sinn is skeptical about large parts of the European Central Bank's policy, because inflation is looming. Those who want to protect themselves against this are turning to precious metals and companies with good gold projects.

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Economists love to set up models and analyze them. They also love to tell stories with pictures so that as many people as possible can understand them. Professor Hans-Werner Sinn, currently probably Germany's best-known economist, demonstrated this brilliantly in his Christmas lecture at the Ifo Institute in Munich. In a striking way, Sinn presented the audience with the image of the coachman who cannot find the reins. "The coachman can't find the reins," is an old economist saying when it comes to central banks losing control.

With clear words, Sinn showed what kind of money multiplication has just taken place in the euro currency union. His hobbyhorse, the Target 2 balances, was of course not to be missed. Greece and Italy also got their comeuppance. Greece, he said, had only been able to mitigate its indebtedness by cutting its debt; without this, there would be no stop to debt, expressed as an increase in debt as a percentage of GDP. In Italy, most of the Mezzogiorno (southern Italy) would be virtually a zombie country - although Sinn of course only referred to many unproductive companies that could not compete on their own without subsidies.

But back to the coachman. The central bankers sit at the coach box, even holding the reins. But the reins become too long, and the central bankers let them drag on the ground, because even the loose reins do not encourage the horses (an image for the economy) to get into a faster gait. But at some point, the horses start trotting and then when a sloping section comes along, they gallop. Braking attempts? Wrong, because the reins are too long, the horses can no longer be stopped.

The breeding ground for inflation has therefore been prepared. It is only a matter of time before demonetization takes hold. In some markets, such as real estate, this is already the case. Gold and silver have also already benefited. And especially with these precious metals, it could continue strongly. Because gold is now times the recognized hedge against the demonetization, speak strong inflation. For investors who want to bet on a gold price increase and have already physically hedged, investments in shares of companies with fundamentally good gold projects are also a possibility.

Take Trillium Gold Mines - https://www.youtube.com/watch?v=R0qYc6BTWlE&t=7s - for example. The exploration and development company is looking for gold in British Columbia, in the excellent Red Lake area. Its flagship project is the Newman Todd gold project there.

Prospective projects are also held by Mawson Gold - https://www.youtube.com/watch?v=f-IryY17Rh4&t=2s - in Finland and in Australia's Victorian Goldfields. The company's gold-cobalt resource is the most advanced in Finland.

Current corporate information and press releases from Trillium Gold Mines (www.resource-capital.ch/en/companies/trillium-gold-mines-inc/) and Mawson Gold (www.resource-capital.ch/en/companies/mawson-gold-ltd/).

In accordance with §34 of the German Securities Trading Act (WpHG), I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and that there is therefore a possible conflict of interest. No guarantee for the translation into German. Only the English version of this news is valid.

Disclaimer: The information provided does not constitute any form of recommendation or advice. Express reference is made to the risks involved in securities trading. No liability can be accepted for any damages arising from the use of this blog. I would like to point out that shares and especially warrant investments are fundamentally associated with risk. The total loss of the invested capital cannot be excluded. All information and sources are carefully researched. However, no guarantee is given for the correctness of all contents. Despite the greatest care, I expressly reserve the right to make a mistake, especially with regard to figures and prices. The information contained is taken from sources that are considered reliable, but in no way claim to be correct or complete. Due to judicial decisions the contents of linked external pages are to be answered for (so among other things regional court Hamburg, in the judgement of 12.05.1998 - 312 O 85/98), as long as no explicit dissociation from these takes place. Despite careful control of the contents, I do not assume any liability for the contents of linked external pages. The respective operators are exclusively responsible for their content. The disclaimer of Swiss Resource Capital AG applies additionally: https://www.resource-capital.ch/de/disclaimer-agb/

 

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Always up to date with the newsletter from SRC

Swiss Resource Capital AG will use the information you provide in this form to keep in touch with you and to provide you with updates and marketing information. To receive our news, you still have to give us permission to send you E-Mails below.

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