The gold price has regained some ground after dropping in the aftermath of last week’s heavily watched Federal Open Market Committee meeting.
The yellow metal opened the period in the US$1,785 to US$1,790 per ounce range, but was just above US$1,805 at the time of this writing on Friday (February 4) afternoon.
I recently had the chance to review the latest Fed takeaways with Gareth Soloway of InTheMoneyStocks.com. He’s always a favorite, and said what many people seem to be thinking: the central bank is starting to panic.
“It’s all selling because the Fed appears to be a little bit in panic mode. Initially it was transitory inflation and they insisted on that for months and months and months. (Now the Fed is) finally admitting, ‘Oh, it’s not transitory'” — Gareth Soloway, InTheMoneyStocks.com
Now that we’ve reached the point where the Fed is admitting it’s concerned about inflation, why isn’t gold doing better? I asked Gareth that question, and he said the yellow metal is behaving like it did in the 1970s.
He explained that in the early 1970s, when there wasn’t much inflation, gold experienced a big move up, much as it did from 2018 to 2020. Around 1975 to 1976, when inflation started to rear its head, gold consolidated for about two years — this is just like what’s been happening since the precious metal hit its all-time high.
If gold is replicating its price pattern from the 1970s — which Gareth thinks would make sense given similarities in inflation data — it should experience a “big move to the upside” midway through the year.
Percentage-wise Gareth doesn’t expect gold’s upcoming increase to be as large as it was in the 1970s, but he does see US$3,000 to US$5,000 as a possibility in the next five years.
As market watchers eye the Fed’s path forward, rate hikes are a key question mark — namely, how many there will be this year. With that in mind, we asked our Twitter followers their thoughts this week. By the time the poll closed, most respondents said they expecting one to two increases in 2022.
We’ll be asking another question on Twitter next week, so make sure to follow us and share your thoughts!
Battery metals are in focus right now as lithium prices ride high, but what about the electric vehicles (EVs) they power? INN’s Priscila Barrera looked at the path forward for EVs as the green energy transition gains traction.
Experts agree 2021 was a strong year for EVs, with car makers offering a wider variety of models, including lower-cost options and different vehicle types. These changes were reflected in sales, which doubled during the period.
“2021 was the year when EVs finally took off; they became an important player in the market. We started to see more affordable models, wider offerings from many car makers, many different brands and in different segments” — Felipe Munoz, JATO
Expectations are strong for 2022 as well, although challenges remain, including EV subsidy cuts in China. And while elevated prices for lithium and other battery metals are exciting for commodities investors, they could become a problem for EV manufacturers — that will be an issue they’ll need to grapple with moving forward.
“It is likely that 2022 will still be characterized by high commodity prices, with the increasing risk of graphite being subject to a supply crunch. Battery prices are likely to see a first-time stabilization or even increase” — Charles Lester, Rho Motion
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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