We are in a reflationary economic environment that is also characterized by geopolitical uncertainty - a good combo for good old glitzy gold.
Reflation can be thought of as "good" inflation. With reflation, yes, prices are rising, but steadily back to a healthy trend level.
To be exact, prices are currently rising at an ideal 2.3%/year.
When price increases are crazy above trend that would be inflation.
In the US, we've not experienced serious inflation since Jimmy Carter was president and all I really (really!) wanted was a pair of Jordache jeans.
In the decade from 1971 to 1981, the S&P 500 added 110%, while gold increased more than 1500%.
Gold was - dare I say - a shining investment.
In terms of geopolitics, in the 1970s, conflict with Iran was the thing.
Eerily familiar, no?
Monthly Market Update, January 2020
Last month the S&P 500 declined -4bps even as the Dow Jones lost -67bps, the Russell 2000 declined -3.21% and the Nasdaq added 2.03%.
As for US bonds, they added 1.92%.
Globally, the MSCI World Index lost -50bps and the Barclays Global Aggregate Bond Index was up 1.28%.
The Euro Stoxx 50 added 1.02% in local-currency (Euro) and 36bps in USD. Meanwhile, the Topix added 1.16% in local-currency (Yen) and 58bps in USD.
