Gold's Bull Market Is Not Over By A Long Shot

Gold's Bull Market Is Not Over By A Long Shot -

Seeking Alpha---"From its bear market low in August 1999 to its August 2020 peak, gold rose a staggering 8x. After such a strong rally, and with gold within 20% of its 1980 high in inflation-adjusted terms, one could be excused for thinking that the metal's bull market has come to an end.

To many, gold's failure to respond positively over the past 12 months to the surge in inflation is a sure sign that the metal is no longer fit for the purpose of protecting wealth in the face of government currency debasement.

However, I believe gold's bull market is far from over. The most compelling reason for this view is the existence of deeply negative real interest rates, and the potential for them to move even lower as inflation rises.

While the speculative nature of precious metals means we cannot know with any certainty what the future holds for gold, data and logic suggest that risks facing gold are heavily weighted to the upside. Furthermore, gold effectively provides an insurance policy against the worst possible economic outcomes....

It should be easy to see how gold could double from current levels if real bond yields fall further. If investors come to the realization that cash will continue to offer near zero interest and that U.S. money supply will continue to grow at double-digit rates, we could see a stampede into assets that are relatively fixed in supply.

As a gold holder I certainly run the risk of losing money in the event that the U.S. government balances its budget allowing the Fed to return real interest rates to positive territory. However, by not investing in gold I would run the risk of losing even more in real terms in the event of stagflation or even hyperinflation - economic scenarios under which I would least welcome such losses."