Higher Inflation Has Historically Meant Higher Gold Prices

advisorperspectives.com  ( Original )
JUN 5, 2018

Tariffs are Inflationary according to Frank Holmes of of U.S. Global Investors. And those Tariffs now just keep on getting bigger daily as the trade wars continue at a frenzied pace. Where will it all end?

The good news in all this is that higher inflation has historically been supportive of the price of gold. In the years when inflation was 3 percent or higher, annual gold returns were 15 percent on average, according to the World Gold Council (WGC).

gold has historically rallied in periods of high inflationclick to enlarge

When gold hit its all-time high of $1,900 an ounce in August 2011, consumer prices were up nearly 4 percent from the same time the previous year. The two-year Treasury yield, meanwhile, averaged only 0.21 percent, meaning the T-note was delivering a negative real yield and investors were paying the U.S. government to hang on to their money. This created a favorable climate for gold, as investors sought a safe haven asset that would at least beat inflation.

ORIGINAL SOURCE: GO GOLD! Inflationary Tariffs Could Supercharge the Yellow Metal by Frank Holmes of U.S. Global Investors for advisorperspectives.com on 6/2/18