A Warning For Gold From Inflation

The inflation rate is still low. The recession is depressing prices. But that could change soon: For states and central banks are flooding the markets, the money supply is rising. The money supply is being increased considerably. In the USA, for example, the increase is 26 percent over the previous year. However, the quantity of goods is not growing to the same extent. This suggests that in the longer term, there will be a rise in prices. Moreover, the new liquidity is driving asset prices, i.e., the prices of shares and real estate. The one who holds money is the stupid one. Gold and shares as protection against inflation.

It is essential to invest in shares or gold to prevent a loss of value of the savings. Gold is ultimately a currency. Gold has existed for thousands of years. Paper money comes and goes. While the euro, dollar and other currencies have lost in value in recent decades, gold has gained an average of almost ten percent. This shows: You can escape the devaluation of money by holding gold.

The prospects for a rising gold price remain good. The past has shown that the price of gold rises with the money supply. And the rescue programs in the wake of the Corona crisis will lead to a significant expansion of the money supply.

However, there are also other opinions on whether we are facing a significant rise in inflation. The low oil price and rising unemployment will lead to lower inflation for once. Admittedly, he believes that the sharp increase in the money supply carries the danger of increasing the inflation rate. However: the companies have not used the loans to finance profitable investments but have only replaced Corona-related sales losses.

When the epidemic is over, the companies will do everything they can to repay the loans they have taken out of necessity. The money supply will shrink again - and so will the monetary inflation potential.

At best, the de-globalization speaks for more inflation. However, globalization has been faltering for ten years without inflation picking up. It is difficult to predict when de-globalization will cause inflation to rise - especially since the next structural inflation damper, digitalization, works in the background. All in all, Corona will do little to change the fact that inflation will remain low in the coming years. For the time being, the ECB's negative interest rates are not likely to cause inflation in the prices of goods, but rather in asset prices".

Negative inflation threatens in the coming months. Falling oil prices and a record of an economic slump are causing inflation rates to decline worldwide. It is almost sure that inflation will fall into negative territory in the coming months.

However, this is not synonymous with deflation, in which prices fall into a sustained downward spiral due to pronounced consumer and investment restraint - extensive fiscal packages and a very loose monetary policy speak against such a scenario. If the economy recovers quickly after the pandemic has subsided, I believe that a rise in inflation is also conceivable in the medium term. Real assets such as equities, real estate and precious metals should then be among the winners".

Lowest value since 2016

Inflation is still on the retreat. Consumer prices in May were 0.1 percent higher than a year earlier. This is the by far lowest inflation rate since June 2016, which analysts had expected on average. In a month-on-month comparison, the price level fell by 0.1 percent.

Energy prices are the main reason for weak inflation. They were 12.0 percent lower than a year ago. The collapse in crude oil prices is likely to be the main reason for this. Excluding energy, food and beverages, inflation was 0.9 percent. Food, mainly unprocessed food, was, in some cases, significantly more expensive than a year ago. In contrast, the prices of industrially manufactured goods hardly changed at all.&n

The inflation rate is still low. The recession is depressing prices. But that could change soon: For states and central banks are flooding the markets, the money supply is rising. The money supply is being increased considerably. In the USA, for example, the increase is 26 percent over the previous year. However, the quantity of goods is not growing to the same extent. This suggests that in the longer term, there will be a rise in prices. Moreover, the new liquidity is driving asset prices, i.e., the prices of shares and real estate. The one who holds money is the stupid one. Gold and shares as protection against inflation.

It is essential to invest in shares or gold to prevent a loss of value of the savings. Gold is ultimately a currency. Gold has existed for thousands of years. Paper money comes and goes. While the euro, dollar and other currencies have lost in value in recent decades, gold has gained an average of almost ten percent. This shows: You can escape the devaluation of money by holding gold.

The prospects for a rising gold price remain good. The past has shown that the price of gold rises with the money supply. And the rescue programs in the wake of the Corona crisis will lead to a significant expansion of the money supply.

However, there are also other opinions on whether we are facing a significant rise in inflation. The low oil price and rising unemployment will lead to lower inflation for once. Admittedly, he believes that the sharp increase in the money supply carries the danger of increasing the inflation rate. However: the companies have not used the loans to finance profitable investments but have only replaced Corona-related sales losses.

When the epidemic is over, the companies will do everything they can to repay the loans they have taken out of necessity. The money supply will shrink again - and so will the monetary inflation potential.

At best, the de-globalization speaks for more inflation. However, globalization has been faltering for ten years without inflation picking up. It is difficult to predict when de-globalization will cause inflation to rise - especially since the next structural inflation damper, digitalization, works in the background. All in all, Corona will do little to change the fact that inflation will remain low in the coming years. For the time being, the ECB's negative interest rates are not likely to cause inflation in the prices of goods, but rather in asset prices".

Negative inflation threatens in the coming months. Falling oil prices and a record of an economic slump are causing inflation rates to decline worldwide. It is almost sure that inflation will fall into negative territory in the coming months.

However, this is not synonymous with deflation, in which prices fall into a sustained downward spiral due to pronounced consumer and investment restraint - extensive fiscal packages and a very loose monetary policy speak against such a scenario. If the economy recovers quickly after the pandemic has subsided, I believe that a rise in inflation is also conceivable in the medium term. Real assets such as equities, real estate and precious metals should then be among the winners".

Lowest value since 2016

Inflation is still on the retreat. Consumer prices in May were 0.1 percent higher than a year earlier. This is the by far lowest inflation rate since June 2016, which analysts had expected on average. In a month-on-month comparison, the price level fell by 0.1 percent.

Energy prices are the main reason for weak inflation. They were 12.0 percent lower than a year ago. The collapse in crude oil prices is likely to be the main reason for this. Excluding energy, food and beverages, inflation was 0.9 percent. Food, mainly unprocessed food, was, in some cases, significantly more expensive than a year ago. In contrast, the prices of industrially manufactured goods hardly changed at all.

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