Is paper gold still strong? Maybe! What for?

On April 8, according to the market chart, although the price of paper gold has fallen slightly recently, its price has always remained above 366 yuan / g, does this indicate that the price of paper gold is still strong?

For this problem, the editor feels that there is a great possibility that paper gold is still strong. Nowadays, although the US economy is constantly recovering, its inflation rate is also gradually rising, which will lead to an "increase" in inflation-fighting demand for gold, thus boosting the price of paper gold.

Precious metals analyst Peter Ginelli wrote about the question: as rising inflation destroys savers' wealth, will the price of gold and silver double or triple? He uses examples to prove that the US dollar has depreciated over the past 45 years, but gold has appreciated a lot. The United States is still printing money, and the Biden administration is pushing trillions of dollars in spending bills. It can be expected that the dollar will continue to depreciate, gold and silver is expected to continue to appreciate, it is worth investors to actively buy.

History has proved that the US dollar is depreciating and gold is rising in value.

Back in 1933, when an ounce of gold traded at just $20 an ounce, the median annual household income in the United States was about $1500. Today, 88 years later, $20 can only buy a few hamburgers and some French fries, but the price of gold is now $1730. This example is a good example of how the US dollar has depreciated a lot over the years, but gold has appreciated sharply in the past century, which can prevent the loss of purchasing power.

Most people know little about the relatively rapid depreciation of the dollar and do not care. The simple fact is that the dollar has been depreciating steadily since the beginning of 1900. Since 1930, the dollar has depreciated by more than 98%, and you can imagine how much its purchasing power has fallen.

Prices in the United States have been rising in recent years. In 2008, it cost $3.98 to buy a pound of beef, but it cost $5.99 in 2021, and the price of a pound of beef soared by 62.7% in just a few years. Similarly, it cost $2.65 a gallon of milk in 2008 and $3.49 in 2021, up 31.7%. It is worth noting that the price of an ounce of gold was only $869 in 2008, but it has risen to about $1730 in 2021, a surge of 180.4 per cent.

Ginelli hinted that although Federal Reserve Chairman Colin Powell claimed that the inflation rate in the United States was less than 2%, it was hard not to doubt it given the sharp rise in commodity prices.

The printing of money and the introduction of spending bills in the United States will also lead to the depreciation of the dollar.

What is the value of the money you have now in 10 years' time? According to historical facts and statistics, it is much less than it is now.

From March 2020 to April 2021 alone, the dollar index fell from 98.7 to 93.1, down 9.7% in a year or so. The average median income in the United States is now close to $62000 a year, and 35 ounces of gold can be bought at current prices. In 2008, the median income could buy 64 ounces, while in 2000, the median income was only $42148.

Over the past 20 years, the annual income of Americans has risen by only 47%, while the price of gold has soared by more than 52%. So at that time your money could buy 45% more gold than it is now, which is actually the value of the dollar lost over the years.

Ginelli suggests that instead of waiting for the dollar to depreciate at zero interest rates, investors should buy gold or silver. This choice will determine purchasing power over the next few years, because as US debt and deficits continue to soar, politicians will fight over every small policy or decision.

Last year alone, more than 26% of dollars were printed. What is your former value four years from now when Democrats control both houses of Congress and introduce trillions of dollars in spending bills?

Ginelli's advice is that investors can sit down and do nothing, or proactively buy gold and silver and rely on these time-tested hard currencies to protect hard-earned money.

However, ECB governing Council member Nott said on Wednesday that the eurozone economy is expected to recover strongly in the second half of the year, which could allow the ECB to start phasing out of its pandemic emergency asset acquisition program (PEPP) in the third quarter.

Mr. Nott said in an interview that the spread of the novel coronavirus pandemic, the slow blockade of epidemic prevention and the slow action of vaccination may all put pressure on the prospects for the coming months, but a series of factors suggest that once the pandemic is brought under control, a surprising situation is likely to occur in the second half of the year.

"if the economy forecasts growth according to our benchmark, we will see better inflation and growth from the second half of the year," Nott said. In that case, it is also clear to me that from the third quarter, we will be able to begin to phase out emergency pandemic asset purchases and end these activities as expected in March 2022. "

The ECB stepped up bond purchases last month in its 1.85 trillion euro pandemic emergency asset acquisition programme, (PEPP), fearing that higher yields, mainly the spillover effects of a sell-off in US Treasuries, could derail the ultimate recovery in the eurozone.

Since then, yields have leveled off. Inflation-adjusted yields are back near the lows reached at the start of the year, which Mr Nott says is acceptable.

"the rise in nominal yields is driven by better inflation and growth prospects, which in my view is completely benign," Nott said. If real interest rates remain roughly unchanged, this means that the rise in famous interest rates is entirely due to rising inflation expectations, which is acceptable. "

"We have every reason to expect a strong economic recovery in the second half of this year, consumers are eager to spend their accumulated savings, more fiscal stimulus measures are imminent, and the external environment has improved significantly," Nott said. "

Nott said that the economic deterioration is only concentrated in the short term, but the outlook has not changed much in the short term. As predicted by the ECB, the rebound in the economy is likely to trigger a surge in inflation, but given the large amount of idle labour market, the surge in inflation is likely to be temporary and price growth will remain below target for several years.

Nott is one of the more conservative members of the ECB's governing council. He also played down concerns about inadequate financial support, arguing that the government's response was better than its initial performance.

Mr Nott also points out that even if the ECB can start phasing out its emergency measures this year, inflation is still too low for the central bank to adjust other tools. "the inflation outlook does not give us reason to tighten conventional tools, such as forward guidance on interest rates or asset purchase programmes, and withdrawing emergency measures does not mean withdrawing from the easy monetary stance."

Judging from Nott's remarks, if the European Central Bank scaled back its emergency bond-buying program in the third quarter, it could raise market expectations of a reduction in bond-buying programs by global central banks, including the Federal Reserve, which is bearish on gold prices in the medium to long term. Investors need to be vigilant.