The price of gold has been in a slump after it reached all-time highs mid pandemic. A variety of micro and macro factors are melding to put this commodity in a major second rally. The macro factors are as present as ever. The Fed is still expanding its balance sheet to pump up inflation. On the Fiscal side, the Biden admin is pushing its $1.9 trillion stimulus package. Inflation is on every investor's mind as treasury yields rise and TIPS spreads see it right around the corner. This precious metal is the classic asset to hold as cash loses its value, but for those who don’t want to own the commodity directly a Canadian mining company Starr Peak Exploration (STRPF) is poised to rally. It has expanded nearby mining territory and investors see it as a value play in the next bull run. Berkshire Hathaway has positioned itself behind Barrick Gold this last summer.
FINSUM + Magnifi: Conventionally most investors want to put money in gold when inflation expectations are on the rise, but we think the closely related looming government debt has a better relationship to the price of this precious metal. The macro factors are leaning toward giving gold second legs for a run in early 2021.
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