Forecast 1: “The year 2021 will be the year when inflation will rear its head with a vengeance. It is not just the increase in commodity prices (including oil), but the beginning of the rise in costs associated with the reorganisation of the global value chain, which in our view seems to be under-appreciated…”
During the first quarter of 2021 the dollar rose by 4.14% while gold fell by 10.53%. Nothing unusual here since gold has traditionally been a good hedge against the dollar and, additionally, since gold is much more volatile than the dollar you need a small gold allocation, relative to your dollar exposure, to protect yourself against adverse dollar movements.
Since Modern Monetary Theory (MMT) has taken us into unexplored territory, it is rather difficult to assess what the future of inflation is by using traditional economic and monetary relationships.
In April of 2018 I chose a rather unusual subject for a financial Newsletter, entitled “Two Hundred Years After his Birth, is Karl Marx Still Relevant in the Age of Financial Bubbles”.
As things stand now, the inflationary pressures we have seen are essentially due to a roaring global economy headed toward pre-pandemic levels, and supply chain disruptions.
In May 2020, when I was still locked down, I wrote a Newsletter where I tried to imagine what the post COVID world economy was likely to look like.
When central banks (CB’s) act in coordination, as has been the case since the Great Financial Crisis, they are debasing their currencies together.
Once again, we try to predict what the year that just started may bring in market-relevant political and geopolitical events, and the financial markets.
The pandemic, which started after we published our forecasts last year, muddled the waters to the point where even when we turned out to be right, we were right for the wrong reasons. In any event, here’s how things worked out.
On November 15th, 2020, 10 members of the Association of Southeast Asian Nations plus China, Australia, New Zealand, South Korea, and Japan, signed the Regional Comprehensive Economic Partnership (RCEP).