Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

1st Quarter | 2021

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

Gold prices continued their upward trend last week, closing at $1,777.80 per ounce.

Inflation is on the rise and anticipated to go higher. The Federal Reserve projects that the higher inflation will be temporary. Some analysts believe the Fed is incorrect and that when inflation does not go away there will be a significant decline in the equity markets.

David Roche, president of the investment firm Independent Strategy, recently told CNBC, “My own view is that we will see inflation of probably 3 or 4% by the middle of next year and that is completely inconsistent with, say, U.S. 10-year bond yields being at 1.6%. That yield could easily double, and when it does, then you come to the crunch point that markets are going to experience.” Roche added, “[The Federal Reserve’s] going to mistake what it calls transitory inflation and try and kind of gloss it over while effectively what it does is create a much longer-term inflationary problem.”

Now might be a good opportunity to buy gold, a time-tested hedge against inflation. Gold prices have turned up off the “double bottom” they experienced earlier this year and could challenge the previous high set at the beginning of this year if inflation does become a problem.

Rick Andrews is president of Avant Capital Management.



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