Alain Corbani: 2022 Will be Different for Gold, and This is Why
Why didn’t the gold price experience more momentum in 2021, and will 2022 be better for the yellow metal? Heading into the new year, those are the questions many investors are asking.
Speaking to the Investing News Network, Alain Corbani, head of mining at Finance SA, shared his thoughts.
Looking back at this past year, he said that in order to perform gold needs a weaker US dollar and negative or declining real rates. Instead, the market got the opposite — a stronger US dollar and higher real rates.
When asked why he thinks the coming year will be different, Corbani, who manages the Global Gold and Precious Fund, emphasized that at the end of quantitative easing (QE) interest rates tend to go down.
He continued, explaining that during its latest meeting, held in mid-December, the US Federal Reserve indicated that its QE efforts will end in three months, meaning interest rates should decrease after that.
“As for the US currency … the macro numbers of the US economy are not leading us to believe that the US currency can maintain this strength,” noted Corbani. When all of those factors are added together, they create a different — and more positive — gold price environment than was seen last year.
“So 2021 was tapering and a higher, stronger US dollar,” Corbani said. “2022 will be the end of QE, which means lower rates, and the start of a weakening US currency because inflation pressures will diminish.”
When asked where the gold price could go in 2022, he said a move of 20 percent should be more than doable. But of course it can be tricky to make predictions. “US$2,200, US$2,300, US$2,500 (per ounce) in the price of gold at the end of 2022 is very achievable, but again, I have one chance out of two to be right ,” commented Corbani.
Watch the interview above for more from Corbani on gold and gold-focused companies in 2022.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.