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Stagflation rears its ugly head

World Gold Council/Gold Hub/10-12-2021

“Stagflationary environments of falling incomes amid rising prices have shown themselves to be both frequent and durable. When they are severe, they can do damage both to the economy and to financial assets. A return to a more powerful stagflation may bode well for gold based on an analysis of history – where it has been the best performing major asset on data back to Q2 1973. But this analysis is just a guide. … Gold has already done very well since 2018, in part reflecting many of the underlying and lingering concerns we still have today. A temporary pause doesn’t feel out of kilter even if gold’s drivers are suggesting it should be higher.”

USAGOLD note: The World Gold Council offers a detailed look at how gold fares under stagflationary conditions. We referenced this report in Tuesday’s DMR and repost it now for those who may have missed it. The report includes an interesting chart and comment on gold and negative yields.

bar chart showing gold under different economic scenarios since 1973
Click to enlarge



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