Move Over COVID, Here Comes Inflation

20 Mar

Move Over COVID, Here Comes Inflation

A majority of money managers in a recent survey say the coronavirus is no longer their number one concern.  Now they have something else to worry about:  inflation!

It will be a relief to have COVID-19 off our minds.  But the inflation coming our way is a world-class wealth destroyer in its own right.

A Bank of America-commissioned monthly survey of asset managers shows that inflation has displaced the coronavirus as the most important risk for investors.  37 percent of the investors list inflation as their top concern.  

An Axios report says, “A net 93% of investors in the survey expect inflation to rise in the next 12 months, up 7 percentage points from last month and the highest reading in the history of the survey, which dates back to at least 1995.

“53% of fund managers expect above-trend inflation along with above-trend growth over the next year, the first time that has happened since March 2011 and the third time in the history of the survey. “

We see elsewhere that Google searches for “inflation” have jumped as well.  That only stands to reason, since the money supply has blown up 26 percent over the last 12 months.  All that new digitally “printed” money has to go somewhere.

Heightened concerns about reviving inflation provide a good reminder to take advantage of any breaks in the gold and silver price to add to your portfolio.  The correction in gold prices may not last much longer.  The Covid-19 economy and global lockdown slowed the rush of central banks to add gold to their reserves.  But now, with economic conditions beginning to free up, the move to add to official gold stocks may soon resume.

Poland’s central bank has just revealed that it has plans to make substantial additions to its gold to its reserves in the coming years.  In an interview last week (3/15) the bank’s governor, Adam Glapinski, said, “At the moment, we have 229 tons of gold.”

“Over the course of a few years we want to buy at least another 100 tons of gold and keep it in Poland as well.”

The growing holdings of central bank around the world are especially important to our friends and clients.  First, their purchases represent a major contributor to de-dollarization, removing support for the dollar’s exchange value.  Second, central banks buy gold for currency reserve in substantial quantities and hold their gold for the long-term.