As 2021 gets underway, gold is well on course to retain its high degree of attractiveness as a safe haven asset. With the International Monetary Fund (IMF)confirming a total of $12 trillion in economic stimulus entered  the global economy last year in order to offset some of the devastation caused by the coronavirus pandemic, many analysts expect to see a corresponding rise in inflation in the latter half of this year as countries around the globe try to reset their balance books.

The IMF has already warned that the level of economic aid and ballooning government debt mean that fiscal deficits will need to be addressed when the economic recovery begins, which many expect in the latter part of the present year. At that point, higher levels of inflation are expected to kick in – setting gold up for a strong bull run down the line but ensuring its appeal as a safe haven asset for those looking to offset that risk right now.

Aberdeen Standard Investments’ head of exchange-traded products Steve Dunn said we are already beginning to see this. He explains, “The amount of negative debt out there is massive. $18 trillion is a disgusting number. Rising inflation pressures in a low interest rate environment tell a very good story for gold prices in 2021.”

The St. Louis Federal Reserve President, James Bullard also confirms this. He said yesterday (Thursday), “You have very powerful fiscal policy in place and perhaps more to come, you have a Fed that has backed away from a pre-emptive strategy… and wants to temporarily have inflation above target, and you have the economy poised to boom at the end of the pandemic. Those things all seem to suggest that the stage is set for higher inflation.”

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