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Gold can surprise with a 20% gain in 2022, says Blackstone's Byron Wien

Kitco News

(Kitco News) In an unexpected move, gold can surge 20% in the new year as it reclaims its inflation hedge status, according to Byron Wien, vice chairman of Blackstone's private wealth solutions business, and chief investment strategist Joe Zidle.

The statement was made in Blackstone's annual 'Ten Surprises of 2022' post and came as gold registered its worst annual performance since 2015, down 3.6%. 

The 2022 surprise prediction sees investors fleeing to the yellow metal for protection against problematic and more persistent inflation.

"The price of gold rallies by 20% to a new record high. Despite strong growth in the U.S., investors seek the perceived safety and inflation hedge of gold amidst rising prices and volatility. Gold reclaims its title as a haven for newly minted billionaires, even as cryptocurrencies continue to gain market share," Wien and Zidle wrote.

This would also mark a reversal of a bearish trend in gold, which saw prices fluctuate between $1,850 and $1,650 for most of 2021 despite annual inflation in the U.S. rising to the highest level in 39 years. Gold has also been competing with bitcoin for investors' safe-haven appetite throughout 2021.

If Wien's prediction proves correct, gold will hit new record highs of above $2,160 an ounce this year.

Wien explained that a "surprise" event is something he believes is "probable" (has a more than 50% chance of happening), but an average investor would only assign "a one out of three chance of taking place."

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The post was published on Monday, and it lists ten surprise events that could happen in 2022.

Other probable surprises on the list include the S&P 500 making no progress in 2022 as strong earnings clash with rising interest rates, persistent inflation morphing into a dominant theme, the yield on the 10-year Treasury climbing to 2.75%, and ESG going beyond corporate policy statements.

Prior to Blackstone, Wien was the chief investment strategist at Morgan Stanley for two decades.

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