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Gold price is ready to launch in 2021; investors bracing for inflation

Kitco News

Kitco News has launched its 2021 Outlook, which offers the most comprehensive coverage of precious metals markets in the new year. Trillions of dollars were pumped into financial markets in 2020 and that won't come without consequences. Economists expect that investors will be Bracing For Inflation in 2021.

(Kitco News) - The new year is just around the corner, and that means it is time for Kitco News to launch its much-anticipated outlook series.

The team at Kitco News continues to bring together the most comprehensive outlook research in the precious metals market. For the last couple of months, we have been gathering reports from the top financial institutions to bring you the best forecasts for 2021.

The one consistent theme we have heard from analysts around the world is that the unprecedented monetary and fiscal stimulus unleashed in 2020 to support the global economy devastated by the COVID-19 will lead to rising inflation pressures started next year.

So this year's theme is: Bracing for Inflation.

Here are a few numbers to put the outlook theme into perspective. Central Banks and governments around the world pumped more than $12 trillion into financial markets. Earlier this week, the value of negative yield bonds worldwide totaled $18 trillion dollars. Meanwhile, the Federal Reserve's balance sheet hit a new record high above $7.3 trillion dollars.

Analysts have said that this much liquidity in financial markets does not come without consequences. Many analysts warn that this much spending will lead to a global devaluation of currencies. In that environment, gold and silver will shine as monetary metals and wealth preserving assets.

I think the best quote to describe market conditions comes from Wells Fargo. In their outlook presentation last week, the analysts said that financial markets are drunk on liquidity, and investors should not expect that 2021 will be the year they sober up.

They are expecting that gold prices can push to $2,200 an ounce in 2021.

But it's not just gold, analysts expect that silver could be the year it breaks free from the yellow metal. Not only will silver benefit from a low interest rate environment and as a hedge against inflation, but if economic growth picks up, then the metal will see renewed industrial demand.

Finally, with most analysts expecting gold prices to push past $2,000 an ounce, we thought this year would be a good time to put a spotlight on gold miners. Equity analysts have noted that gold equities are extremely undervalued compared to where they were in the last bull cycle. Not only that, but with cleaner balance sheets, they are in a better position to capitalize on higher gold prices.

This year for our Invest Like the Experts series, we asked our panel of experts how they would invest $10,000 in the mining sector.

Don't miss our outlook coverage, which will run until mid-January.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.