According to a precious metals firm, physical gold and silver will continue to be attractive assets as investors seek to protect their wealth and purchasing power while signs of an inflation spiral are visible. In its latest market report, Degussa chief economist Thorsten Polleit says not only consumer prices are at their highest in decades around the world, but rising economic data also point to high inflation pressures in the years to come.
Thorsten Polleit thinks Jerome Powell is still pursuing pigeon policies
Economist Thorsten Polleit says she sees an industry that is emphasizing the rising inflationary trend. Home prices in the US have increased by about 20% this year. In Europe, German house prices rose more than 13%. Thorsten Polleit notes that rising house prices are generally good indications that persistent inflation is “raising its ugly head” and adds that the current threat is inflation getting out of control:
If people hope that commodity price inflation will rise and remain high in the future, they will adjust wage, rent and loan agreements. For example, workers will charge higher wages, property owners will demand more money to own a home, and lenders will increase lending rates.
Thorsten Polleit notes that so far central bankers around the world have been able to reduce the threat of rising inflation. Cryptocoin. com, earlier this week, Federal Reserve Chairman Jerome Powell said in his testimony before Congress that he will discuss speeding up the process of reducing the amount of bonds the central bank buys each month. He also stated that the time has come to “retire” the term “temporary” used for inflation. While Jerome Powell takes a more hawkish tone on monetary policy, Thorsten Polleit thinks he’s still sticking with his dovetails:
Frankly, there is no desire to immediately change course. The intent is that people expect the Fed to do something about inflation at more or less some point, and that will be enough to keep them inactive. So far, it seems to be working, as central banks have gotten away with it. As the money supply continues to expand at high rates, commodity price inflation will likely remain high in the coming years, and people will likely get used to it because they are used to extremely low interest rates.
“Long-term investors should keep physical gold and silver in their liquid portfolios”
The economist notes that central banks have no desire to stop the growing threat of inflation. “As inflation rises and inflation expectations rise, there should be more restrictive monetary policy,” Thorsten Polleit says.
Unfortunately, central banks are hesitant to abandon the inflationary policy route, fearing that applying the brakes will plunge economies into recession and crash financial markets.
Thorsten Polleit states that the increased risk is the punishment of consumers, as central banks timeout, adding that inflation will ultimately create winners and losers in the global economy:
Owners of assets with rising prices gain, while owners of money suffer. Because they can buy less assets for their money.
The famous economist states that investors should start holding some physical gold and silver in their portfolios to protect themselves:
For long-term investors, holding physical gold and silver in their liquid portfolio seems to hold significant upside potential in the coming years, especially when buying at current prices that we consider relatively cheap. It can also enable them to reduce risk and increase revenue.