Wouldn’t it be nice to go to sleep at night not affected by a crash on the stock market or a pandemic?
That’s what Egyptian billionaire Naguib Sawiris told CNBC this week.
Sawiris is a long-term investor in gold and acknowledges that the precious metal acts as a buffer to risks in the market.
He considers it to be a fundamental asset and at some point held up to 50% at a single time. A substantial part of his net worth is in gold.
One hedge fund manager, Diego Parrilla, is confident gold’s price could climb to $3,000 to $5,000 an ounce in the next three to five years.
What Parrilla and Sawiris have in common is that they both believe inflation will be the cause of something worse.
This also happens to be the hedge fund manager who correctly called gold’s new all-time high of $2,000 in 2020 well before it happened.
Inflation is, of course, not a topic that is new to us. Although there are many layers of complexity to inflation, on a very high level, the more it rises, the worse it is for everyone.
According to Goldman Sachs, if the Federal Reserve under-reacts to rising inflation and a slowing global economy, there is a significant upside for gold.
The Fed has stated many times that they will and “are” doing everything they can to control inflation. However, it is possible their attempts to save our economy could be hurting more than it’s helping.
One of the biggest concerns right now is that the Fed will end up responding too late and too aggressively to high inflation and potentially cause another recession.
The central bank is taking a gamble that may or may not pay off that a growing number of economists feel they’re left with no easy options. Goldman views the precious metal as a “good strategic purchase” for those that want to hedge against tail risks. They believe gold is undervalued and has up to a 38% potential upside if the economy slows.
We’re not surprised by the overall sentiment on gold. The never-ending pandemic saga continues, loose monetary policies from the Fed go on, and inflation continues to drive the value of the dollar down.
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