Gold has re-emerged as a critical asset for investors seeking to hedge against inflation and monetary uncertainty in the 2020s, driven by different dynamics compared to previous bull markets.
The price of gold is closely tied to monetary dynamics such as the growth of the monetary base. Historically, as the monetary base expands, gold prices rise.
Inflation expectations are becoming the defining economic concern of the decade, and as a result, investors are increasingly turning to gold to protect themselves from inflationary pressures.
The divergence between M2 and gold prices, which corrected by 2024, reveals a trend in which gaps are typically unsustainable over the long term.
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