Strong fundamental environment for commodities
There are various reasons why the gold price may rise above US$2,000 per troy ounce in 2022. One is inflation, which is becoming increasingly problematic and more persistent than initially assumed. Second, real interest rates will remain strongly negative. These two reasons alone should generate buy signals for gold investors. Indeed, in times of negative real interest rates, gold generated an outstanding 21 percent annual return on average. In addition, the expectation of three interest rate hikes in the current year is already priced in. An interest rate hike cycle is expected from March onwards. If there are any changes and further uncertainties, the gold price can only benefit from this.
The global economy is also not running as smoothly as one would like. If the economy continues to weaken, it will probably be difficult for central banks to implement tightening measures. After all, with national debts of almost 30 trillion US dollars, higher interest payments are naturally extremely problematic. Looking at the past also shows that during Fed rate hike cycles, such as between 2015 and 2019 or between 2004 and 2005, the price of gold has risen significantly. For example, between 2015 and 2019, the Fed raised interest rates nine times and at the same time the price of gold went up by almost 35 percent. A similar thing happened in the 1970s.
So, there is no reason to doubt gold as a value preservation vehicle. Investors could therefore look at stocks like Gold Terra Resource or Caledonia Mining.
Gold Terra Resource - https://www.youtube.com/watch?v=Pi1uEfDSBcA - is working on the Yellowknife City Gold Project in the Northwest Territories, a large project with previously producing gold mines.
Caledonia Mining has been successfully producing in Zimbabwe at the Blanket Gold Mine.
Current corporate information and press releases from Gold Terra Resource (www.resource-capital.ch/en/companies/gold-terra-resource-corp/) and Caledonia Mining (www.resource-capital.ch/en/companies/caledonia-mining-corp/).
In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.
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