Gold price surge predicted as inflation rises

The number of people buying gold may be set to rise as a financial expert predicts core inflation rates to increase over the next 18 months.

Citi Analyst Tom Fitzpatrick said today’s inflation looks to be mirroring trends seen in the late 1950s when prices continued to soar well into the mid-1960s.

Mr Fitzpatrick told King World News that the economic situation was similar at that time due to “very easy monetary policy” and warned inflation increases could be on the horizon.

He argued that the average American is already feeling the pinch, with declining real income and rising rent, food, education, transport and health care costs.

“At this point, even though it’s not reflective in the core indices, out in the real world these price spikes are already taking place,” the analyst explained.

What does this mean for the price of gold?

According to Mr Fitzpatrick, all of these indicators could see more investors flocking to gold, as the precious metal has a “flight-to-safety aspect” to it, which is particularly true when people fear inflation rises.

With inflation taking off and estimates that the US Federal Reserve could miss its targets, these concerns are heightened.

“There is certainly an argument that inflation is going to head well above the 2 per cent inflation rate we hear talked about,” Mr Fitzpatrick stated.

“In that environment, there is no doubt that the Fed will be behind the curve. Hopefully this will not be to the same extent as we saw in the 1970s, but they will be behind the curve.”

Mr Fitzpatrick noted that when this occurs, it is difficult to see anything other than huge benefits for those who have invested in gold. Around 30-35 years ago, similar economic circumstances resulted in the price of gold multiplying eight-fold.

Between 1970 and 1974, the value of the yellow metal multiplied by six when sharp inflation hit the markets.

“So we’ve seen very sharp moves in gold when we have previously seen a major increase in the core inflation rate,” Mr Fitzpatrick continued.

“Even if we saw a move to just a 4 per cent inflation rate, with the Fed behind the curve that would be a catalyst for a much higher level in the price of gold.”

Could gold prices jump 90%?

When core inflation began moving towards 2.5 per cent in both 1998-2002 and 2003-2006, gold prices soared 50 and 90 per cent respectively.

With inflation again tipped to be entering a potential period of substantial increases, gold could be set to experience similar gains on the market.

The World Gold Council recently noted that investors are taking a ‘wait and see’ approach on the yellow metal, with many happy to be patient with prices before taking the plunge.

However, if you feel now is the time to invest, contact Guardian Gold and Guardian Vaults to discuss options with a dedicated adviser. We offer a seamless solution on buying, selling, storing and insuring gold, for first-time and experienced investors.

Disclaimers: Guardian Vaults Holdings Pty Ltd, Registered Office, Scottish House, 100 William Street, Melbourne, Victoria, 3000. ACN 138618176 (“Guardian Vaults”) All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from the publisher and/or the author. Information contained herein is believed to be reliable, but its accuracy cannot be guaranteed. It is not designed to meet your personal situation. Guardian Vaults, its officers, agents, representatives and employees do not hold an Australian Financial Services License (AFSL), are not an authorised representative of an AFSL and otherwise are not qualified to provide you with advice of any kind in relation to financial products. If you require advice about a financial product, you should contact a properly licensed or authorised financial advisor. The information is indicative and general in nature only and is prepared for information purposes only and does not purport to contain all matters relevant to any particular investment. Subject to any terms implied by law and which cannot be excluded, Guardian Vaults, shall not be liable for any errors, omissions, defects or misrepresentations (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (direct or indirect) suffered by persons who use or rely on such information. The opinions expressed herein are those of the publisher and/or the author and may not be representative of the opinions of Guardian Vaults, its officers, agents, representatives and employees. Such information does not take into account the particular circumstances, investment objectives and needs for investment of any person, or purport to be comprehensive or constitute investment or financial product advice and should not be relied upon as such. Past performance is not indicative of future results. Due to various factors, including changing market conditions and/or laws the content may no longer be reflective of current opinions or positions. You should seek professional advice before you decide to invest or consider any action based on the information provided. If you do not agree with any of the above disclaimers, you should immediately cease viewing or making use of any of the information provided.

Enquire now

Please provide your details and we will contact you to discuss your needs.

[contact-form-7 id="1402" title="Form1 - Enquire Now"]

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

[contact-form-7 id="1402" title="Form1 - Enquire Now"]

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

[contact-form-7 id="1853" title="2018 - Sydney Deposit Box"]

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

[contact-form-7 id="1854" title="2018 - Melbourne Deposit Box"]

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

[contact-form-7 id="1856" title="2018 - Sydney Safe Box"]

Enquire Now

Please provide your details to reserve space at Guardian Vaults.

[contact-form-7 id="1855" title="2018 - Melbourne Safe Box"]